GST ON GOODS TRANSPORTATION AGENCY
Introduction: If entity is goods transportation agency, then they had been provided with various option to choose their mode of taxability, along with this entity is also required to see whether service provided by them falls under the given list of exemption; whether they are required to registered or not. In this article we will analyze all the provision relating to goods transportation agency.
Definition:
Goods transportation agency has been defined in clause (ze) of notification no.12/2017-Central Tax (Rate) dated 28.06.2017; which prescribes, any person who provides service in relation to transport of goods by road and issues ‘consignment note’ by whatever name called. Therefore, if service provider wants to qualify himself as Goods Transportation Agency then they shall issue consignment note; because if a consignment note is issued, it indicates that the lien on the goods has been transferred (to the transporter) and the transporter becomes responsible for the goods till its safe delivery to the consignee.
Consignment Note means a document, issued by a goods transport agency against the receipt of goods for the purpose of transport of goods by road in a goods carriage, which is serially numbered, and contains the name of the consignor and consignee, registration number of the goods carriage in which the goods are transported, details of the goods transported, details of the place of origin and destination, person liable for paying service tax whether consignor, consignee or the goods transport agency.
Mode of Taxability :
Goods Transportation Agency has been provided with option that either they can opt for forward charge or they can exercise the option of reverse charge if they are opting for forward charge; If GTA is opting for forward charge, they are required to charge 6% CGST and 6% SGST in this option they will be eligible to take credit of inputs, input services and capital goods procured by them. In case where GTA is opting for reverse charge then assessee availing the service of GTA will be liable to pay reverse charge. In that case if assessee is situated in non-taxable territory then again GTA will be liable to such tax the rate of 2.5% CGST and 2.5% SGST. It shall be noted that if such service is provided to unregistered individual then it will be exempted.
Specified person for above purpose is
- If GTA service has been availed by person who is unregistered being Individual or HUF then in that case such service will be treated as exempt service.
- If any department of Central Government or State Government has any Local Authority is being registered solely for the purpose of deduction of TDS as required under section 51 of CGST Act, 2017 then in such case also service provided by GTA will be exempted.
- In case where GTA has opted for reverse charge mechanism then in that case GTA will not be eligible to claim the Input Tax Credit of any of the Inputs or Input service or capital goods procured by them.
- In such cases where GTA has opted for taxing their service under reverse charge basis then recipient will be liable to pay tax on such and GTA will not collect any tax on such service; Therefore, it is important to determine who will be recipient. Accordingly, recipient for purpose of discharging GST liability will be, any person who pays the consideration for such service will be treated as recipient of service and he will be eligible to take credit of such payment provided it has been availed for business purpose.
Registration requirement for GTA:
According to section 22 (1) of CGST act 2017, every supplier shall be liable to get registered under GST in a state or UT if his aggregate annual turnover in a financial year exceeds Rs. 20 lakhs (In case of supplier of service) or Rs. 10 lakhs (In case of special category states).
However, as per notification no. 5/2017 – Central Tax dated June 19, 2017, If the persons are exclusively engaged in making supplies of taxable goods or services, and tax on which is to be paid on reverse charge basis by the recipient of such goods or services under section 9(3) of the CGST act, 2017 are exempted from obtaining registration under the act.
Therefore, if GTA has opted for reverse charge mechanism than it is not required to obtain registration as they are exclusively engaged in supply on which tax will be paid on reverse charge basis. However, if GTA has opted for forward charge then it will be required to obtain registration if turnover exceeds the specified limit.
Specific Exemptions:
If GTA has provided service by way of transport in a goods carriage of following products being (i) Agricultural produce, (ii) Milk, salt and food grain including flour, pulses and rice, (iii)Organic manure (iv)Newspaper or magazines registered with the Registrar of Newspapers (v) Relief materials meant for victims of natural or man-made disasters, calamities, accidents or mishap; (vi) Defense or military equipment.
- In case where consideration charged by GTA for transportation of goods on a consignment transported in a single carriage does not exceeds one thousand five hundred rupees.
- In case where consideration charged by GTA for transportation of goods for a single consignee does not exceed rupees seven hundred and fifty.
- Further, it shall also be noted that if any vehicle has been given on hire to GTA by any person than such supply will be exempted; and GTA is not required to pay tax on such amount.
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gst on gta reverse charge exemption | Mode of Taxability