GST on GTA Services under RCM (Reverse Charge Mechanism)

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⁠⁠⁠GST on GTA Services under RCM (Reverse Charge Mechanism)

Before going any further about the reverse charge mechanism on GST on GTA Services, first we need to know what is actually a GTA (Goods Transport Agency). As per Notification dated 28-06-2017, Goods Transport Agency means person who provides services by transportation of goods by way of Roads AND issues a Consignment note to the concerned party by whatever name called.

That means to become a Goods Transport Agency one must comply with these two conditions:

  1. Transportation of Goods by Road ;
  2. Issuing of Consignment note.

Now What is a Consignment Note ? Consignment note is issued by the GTA for goods received by it for transportation. A consignment note includes all the details related to goods to be transported, serial numbered, details of origin and destination, liability of paying GST i.e. whether by consignor, consignee or the GTA.

GST ON GTA

Under the New GST Regime, Liability of paying GST on GTA is on Service Receiver instead of service provider. Few provision related to GST on GTA services are as follows:

  1. GST @5% on GTA Service will be Paid by Service Receiver under RCM.
  2. Service Receiver can take full credit of GST so Paid on GTA.
  3. As per Notification No-5/2017, persons who are only engaged in making supplies of taxable goods or services or both, the total tax on which is liable to be paid on reverse charge basis by the recipient of such goods or services or both under sub-section (3) of section 9 of the said Act as the category of persons exempted from obtaining registration under the aforesaid Act. Thus, a GTA does not have to register under GST if he is exclusively transporting goods even if the turnover exceeds 20 lakhs as the total tax is required to be paid by the recipient under reverse charge basis.
  4. GST will not apply on transport of following goods by a GTA- Agricultural produce; milk, salt and food grain including flour, pulses and rice; organic manure; newspaper or magazines registered with the Registrar of Newspapers; relief materials meant for victims of natural or man-made disasters; defence or military equipment; goods, where consideration charged for the transportation of goods on a consignment transported in a single carriage is less than Rs. 1,500; goods, where consideration charged for transportation of all such goods for a single consignee does not exceed Rs. 750.
  5. GTA can opt for 12% GST with ITC or 5% GST with no ITC. However, the GTA has to give an option at the beginning of financial year

That’s all for GST on GTA Services under Reverse Charge Mechanism.