Transport services are an essential component of any economy. Any disruption in transportation can take the entire business channel down with them. Due to the significant importance of transportation services, many businesses have faced the far-reaching impact of changes in the price of gasoline. Not only companies but many local transporters also faced the effects and consequences of change in gasoline prices. Transportation by road is the most common mode of transit for goods in India. Highways carry around 65% of freight and 80% of passenger traffic, as per the National Highways Authority of India. Services involving the transportation of goods are exempt by road except for a GTA and a courier agency. GTA full form is goods transport agencies. GST on transport is only imposed on GTAs; as a result, even under the GST system, the transport services for goods by road remain excluded.
"Goods transport agency means any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called. – para 2 of Notification No. 12/2017-CT (Rate) and No. 9/2017-IT (Rate) both dated 28-6-2017, effective from 1-7-2017."
A goods transport agency or GTA is an individual or a company that offers transportation service for goods by road and issues consignment notes under their name. While others lease out vehicles for goods delivery, only those who issue a consignment note qualify as a GTA. As a result, a consignment letter is required to be considered a GTA. The service comprises not just the transport of commodities but also various intermediate/ancillary services such as-
If these services are integrated and are not performed as separate activities, they are likewise covered by GTA.
A consignment note is a document provided by a goods transportation company for shipping items by road in a goods carriage. If a consignment note is issued, it implies that the products' claim is transferred to the transporter. The transporter is now in charge of the goods until they are safely delivered to the consignee. If the transporter does not give a consignment note, the service provider will not be covered by the goods transport agency.
A serially numbered consignment note includes the following information:
A reverse Charge Mechanism (RCM) is implemented under the Service tax regulations. There was a 60% (40% taxed) reduction for the transportation of used household goods and a 70% (30% taxable) reduction for the transport of standard commodities.
| SERVICES BY GTA | GST RATE |
| Carrying-agricultural produce milk, salt, and food grains such as flour, pulses, and rice organic manure newspapers or magazines registered with the Registrar of Newspapersrelief materials for victims of natural or man-made disasters defense or military equipment | 0% |
| Carrying- goods, where consideration charged for the transportation of goods on a consignment transported in a single carriage is less than Rs. 1,500 | 0% |
| Carrying- goods, where consideration charged for transportation of all such goods for a single consignee does not exceed Rs. 750 | 0% |
| Any other Goods | 5% No ITC OR 12% with ITC |
| Used household goods for personal use | 0% |
| Transporting goods of unregistered persons | Earlier exempted, but later made taxable; currently, list yet to be notified |
| Transporting goods of unregistered casual taxable persons | Earlier exempted, but later made taxable; currently, list yet to be notified |
| Transporting goods (GST paid by GTA) | 5% No ITC OR 12% with ITC |
| Transporting goods of 7 specified recipients | Irrespective of GTA choosing 12% (with ITC) and 5% (without ITC), if the GTA opts for paying tax on forward charge by giving a yearly declaration |
| Hiring out a vehicle to a GTA | 0% |
There was some uncertainty over whether a GTA was required to register under GST. According to Notification No. 5/2017- Central Tax dated 19/06/2017, a person who exclusively makes deliveries of taxable goods/services on which the Reverse Charge Mechanism (RCM) applies is exempt from getting GST registration. Thus, a GTA is exempt from GST registration if he is solely transporting products where the recipient must pay the complete tax under the reverse charge principle (even if the turnover exceeds the threshold limit). Additionally, if your GTA is GST registered, you can use the GST search tool to validate the GSTIN.
The following firms (service recipients) are obligated to pay GST under reverse charge:
