Goods Transport Agency under GST & GST on Transportation

Tally Solutions |Updated on: August 23, 2021

Goods Transport Agency (GTA) Services in India
What Is Goods Transport Agency (GTA)?
Classifying the Services Provided By a GTA Operator
What is a consignment note?
How To Identify A Consignment Note
GST On Transportation Charges
Issues: GST On Transportation Charges in Invoice
How To Add Transport Charges in GST Invoice Tally

Goods Transport Agency (GTA) Services in India

The most commonly used form of goods transport in India is via road. The data from the National Highways Authority of India, about 65% of freight and 80% of passenger traffic are carried by the roads.

Transportation of goods by road is done by transporter or courier agency. This article will discuss the transporter, i.e., The GTA.

What Is Goods Transport Agency (GTA)?

Goods Transport Agency (GTA) means any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called.

It is to be noted here that, only those issuing a consignment note are considered as a GTA. Thus, a consignment note is an essential condition to be considered as a GTA.

Classifying the services provided by a GTA operator

Road transportation services or any related service, such as loading, unloading, packing, unpacking, etc. falls under the services provided by Goods Transport Agency but provided a consignment note is issued by such operator in respect of each of services provided by him.

What is a consignment note?

A consignment note is a document regarding the carriage of goods by road which declares the contract of carriage and includes the instructions given to the carrier and proves the contract of carriage.

How to identify a consignment note

Serial Number
Names of the consignor and consignee
Registration number of the carriage used for transport of goods
Details of the goods transported
Place of origin and destination
Person liable for paying tax

GST on transportation charges

Services by GTA	Transportation charges GST rate
Carrying- · 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	0%
Carrying- · Supplies, where consideration charged for the transportation of goods on a consignment transported in a single carriage is less than Rs. 1,500	0%
Carrying- · Supplies, where consideration charged for transportation of all such goods for a single consignee does not exceed Rs. 750	0%
Carrying- · Any other goods · Used household goods for personal use · goods of unregistered persons · goods of unregistered casual taxable persons	5% No ITC or 12% with ITC 0% 0% 0%
Transporting goods (GST paid by GTA)	5% No ITC or 12% with ITC
Hiring out the vehicle to a GTA	0%

Issues: GST On transportation charges in invoice

a) GST Transport charges on GST should be charged on the total taxable value i.e., including the Freight Charges.
b) The rate applicable on GST Transport Charges: Freight charges/Freight forwarding added to Invoice should be charged at such rates applicable for the goods or services. For example: if the goods transported in GST is a goods falling under 5% slab then the Freight charges will also be charged at the same rate.
c) Who is to pay transport charges under GST? It is to be understood here that the person who pays Freight is the recipient of service. But the assessment of two situations makes it clear about the taxability of GST on transportation charges.

Situation	Liability
Paid Lorry Freight by the consignor to GTA (Paid consignment)	Consignor becomes the recipient of the service as he will be liable to pay GST on Transportation Charges.
Paid Lorry Freight by the consignee to GTA (to pay)	Consignee becomes the recipient of the service and he will be liable to pay GST on Transportation Charges

d) Who must bear the GST on transportation charges: This is based on the following 2 scenarios: Recipient belongs to the specified category of persons, Or Recipient does not belong to specified category of persons.

Specified Category persons

When a Goods Transport Agency (GTA), whether registered or unregistered, provides taxable transportation or related services to any of the specified persons, the recipient of the service is liable to pay tax on reverse charge basis. These specified persons are :

A person registered under GST
A factory registered under or governed by the Factories Act, 1948
A Society registered under Societies Registration Act, 1860 or under any other law for the time being in force in any part of India
A co-operative society established by or under any law
A body corporate established by or under any law
A partnership firm, whether registered or not under any law, including an association of persons
A casual taxable person

Note 1: All the persons specified above are mandatorily required to register under GST, irrespective of their turnover, as they are liable to pay tax on reverse charge basis.

Note 2: Any person in the above list of specified persons who pay tax on reverse charge basis on transportation service received from a GTA, is eligible for full input credit of the tax paid.

Non- specified Category persons

These are :

Unregistered Sole Proprietor
Unregistered HUF (Hindu Undivided Family)
Unregistered BOI (Body of Individuals)

Note :

When a registered GTA provides transportation service to any of these persons, the GTA is liable to pay tax on the supply
This is applicable only when the GTA is registered
If the GTA is also unregistered, there will be no tax liability on the GTA or the recipient
In such cases, where a registered GTA is liable to pay tax @ 5% on transportation service, 2 options have been given to them:
- Pay tax @ 5% with no input tax credit
- Pay tax @ 12% with full input tax credit

e) Treatment when GST Transport Charges is added in the invoice by the supplier of goods or Services: GST will be calculated on the total taxable value (including Freight charges).

Beside CGST law on Value of supply says that taxable value to mean transaction value which includes.

Any taxes, duties, cesses, fees & charges levied under any law other than GST law if charged separately by the supplier
Any Amount -Liable to Pay – Supplier-Incurred By – Recipient and-Not included in the price actually paid or payable for the supply
Incidental expenses i.e. Packing & Commission etc.
Interest, Late Fee or Penalty for delayed payment
Subsidies provided by the State or Central Government

How To Add Transport Charges in GST Invoice TallyPrime

Step 1	Enter gateway of TallyPrime
Step 2	Select Company
Step 3	Under Masters, Create ledger, · Create ledger Transport Charges GST under the group sales ledger · Select GST Rate to be applicable · Now fill up the SAC code, description of service and tax rate
Step 4	Click Yes to save the new ledger created
Step 5	Visit back gateway of TallyPrime and now select the Accounting Voucher tile
Step 6	Under Accounting Voucher select Sales voucher and start filling up the quantity, product description, rate and in next line as below item select the Transport Charges GST ledger created and feed up the value of Transport charges GST
Step 7	Select the appropriate GST Tax liability ledger for the Outward supply made by you. The system will now automatically calculate GST on Taxable value i.e., your value of supply including Freight Charges.