We are here discussing the provisions relating to Goods Transport Agency in Goods and Services Tax and Income Tax.
1. What is the Goods Transport Agency?
As per Notification No. 11/2017-Central Tax (Rate) dated 28th June, 2017, “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.
Thus GTA means a person who provides transport services of goods by road and issues a consignment note. If a consignment note is not issued then the transporter cannot be categorized as a GTA.
2. What is Consignment Note?
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, and the person who will be liable for the service tax payable from the consignor, consignee or the goods transport agency.
SAMPLE OF CONSIGNMENT NOTE
3. Taxability of GTA
According to notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, Goods Transport Agency services are taxable either at 5% or 12%.
3.1 Providing Services to Specified Category Recipient
Supply of Services by a Goods Transport Agency (GTA) in respect of transportation of goods by road to Specified Category Recipients are treated on Reverse Charge and the Recipient is Liable to pay GST.
(a) any factory registered under or governed by the Factories Act, 1948(63 of 1948);or
(b) any society registered under the Societies Registration Act, 1860 (21 of 1860) or under any other law for the time being in force in any part of India; or
(c) any co-operative society established by or under any law; or
(d) any person registered under the Central Goods and Services Tax Act or the Integrated Goods andServices Tax Act or the State Goods and Services Tax Act or the Union Territory Goods and Services TaxAct; or
(e) any body corporate established, by or under any law; or
(f) any partnership firm whether registered or not under any law including association of persons; or
(g) any casual taxable person.
Recipient is required to pay GST @ 5% on Reverse Charge Mechanism and of course the Recipient is allowed to take Input Tax Credit (ITC) subject to general eligibility criterion.
3.1.1 Who is Liable to Pay GST on RCM?
“The person who pays or is liable to pay freight for the transportation of goods by road in goods carriage, locatedin the taxable territory shall be treated as the person who receives the services.
3.2 Services to other than Specified Category Recipient
If GTA is exercising the option to pay GST under forward charge and providing the services other than specified category recipient than.
In such case, GST shall be paid by GTA itself on forward charge mechanism @ 5%. GTA is not allowed to take any input tax credit.
If the goods transport agency choose to pay GST at 12% under forward charge mechanism than GTA is allowed to take input tax credit.
This is a beneficial option especially for B2B transactions as GTA can take credit of input taxes andcharge the tax @ 12% which the recipient also can avail tax credit.
The option by GTA to itself pay GST on the services supplied by it during a Financial Year shall be exercised by making a declaration in Annexure V on or before the 15th March of the preceding Financial Year.
Annexure V
FORM
Form for exercising the option by a Goods Transport Agency (GTA) for payment of GST on the GTA services supplied by him under forward charge before the commencement of any financial year to be submitted before the jurisdictional GST Authority.
Reference No.-
Date: -
1. I/We______________ (name of Person), authorized representative of M/s……………………. have taken registration/have applied for registration and do hereby undertake to pay GST on the GTA services in relation to transportation of goods supplied by us during the financial year……………under forward charge in accordance with section 9(1) of the CGST Act, 2017 and to comply with all the provisions of the CGST Act, 2017 as they apply to a person liable for paying the tax in relation to supply of any goods or services or both;
2. I understand that this option once exercised shall not be allowed to be changed within a period of one year from the date of exercising the option and will remain valid till the end of the financial year for which it is exercised.
Legal Name:
GSTIN:
PAN No:
Signature of Authorized representative:
Name of Authorized Signatory:
Full Address of GTA:
4.0 Exemptions available to GTA
Services provided by a Goods Transport Agency, by way of transport in a goods carriage of following are exempted -
(a) agricultural produce;
(b) goods, where consideration charged for the transportation of goods on a consignment transported in asingle carriage does not exceed one thousand five hundred rupees;
(c) goods, where consideration charged for transportation of all such goods for a single consignee does not exceed rupees seven hundred and fifty;
(d) milk, salt and food grain including flour, pulses and rice;
(e) organic manure;
(f) newspaper or magazines registered with the Registrar of Newspapers;
(g) relief materials meant for victims of natural or man-made disasters, calamities, accidents or mishap; or
(h) defence or military equipments.
5.0 Registration for GTA
5.1 In case of services provided only to Specified Category Registered Business
In case GTA is providing whole of his services to only those Specified Category Registered Businesses as specified in the Notification No. 13/2017- Central Tax (Rate) dated 28.06.2017, then the recipient is required to pay GST on Reverse Charge.
In this case, GTA is exempted from obtaining registration of GST.Even though in case the GTA is supplying inter-state supplies, he is not required to register under GST.
5.2 In case of services provided by GTA are under the exemption list
In case the GTA is engaged in exclusively carrying those supplies then he is not required to register by following Sec 23(1)(a) of CGST Act which stipulates that person supplying wholly exempted good or services then the GTA is not be liable to registration.
5.3 GTA Services to other than Specified Category Registered Business or Other than Exempted GTA Services - Need to Register Subject to Threshold Limit
In case GTA is Providing Services to other than specified categories or Other than Exempted GTA Services then GTA is required to Register if the Threshold Limit of Rs 20 L (Rs 10 L for Special Category States) is crossed or making Inter-state Supply.
In case the threshold limit is less than Rs 20 L / 10 L as the case may be and also not making any inter-state supply, then GTA is not required to register.
6.0 Records to maintain by GTA
As per Sec 35(2) of CGST Act
Every owner or operator of warehouse or godown or any other place used forstorage of goods and every transporter, irrespective of whether he is a registered person or not, shall maintain records of the consigner, consignee and other relevant details of the goods in such manner as may be prescribed.
Rule 58(4) of CGST Rules states
Subject to the provisions of Rule 56,
(a) any person engaged in the business of transporting goods shall maintain records of goods transported, delivered and goods stored in transit by him along with the Goods and Services Tax Identification Number of the registered consigner and consignee for each of his branches.
(b) every owner or operator of a warehouse or godown shall maintain books of accounts with respect to the period for which particular goods remain in the warehouse, including the particulars relating to dispatch, movement, receipt and disposal of such goods.
Section 44AE of Income Tax Act: Presumptive Taxation for Transporters
Applicability of Section 44AE
The presumptive income scheme under section 44AE of the Income Tax Act, 1961 is applicable to all categories of taxpayers. The taxpayers including an individual, HUF, partnership firm, a registered company can opt for this scheme.
Eligible Business for Section 44AE
An assessee who satisfies the following conditions is eligible for income scheme under section 44AE:
- The assessee is running the business of plying, hiring, or leasing such goods carriages
- Additionally, the assessee owns not more than ten goods carriages at any time during the previous year.
Presumptive Amount of Income under section 44AE
The income under section 44AE will be the aggregate of the profits and gains, from all the goods carriages owned by the assessee in the previous year. The goods carriage are divided into two categories i.e. heavy goods vehicles and other than heavy goods vehicles or light goods vehicles. The profits and gains from each goods carriage will be calculated as per the following conditions:
Heavy goods vehicles
An amount equal to Rs 1000 per ton of gross vehicle weight or unladen weight for every month or part of a month during which the heavy goods vehicle is owned by the assessee in the previous year orthe amount the assessee claims to have from such heavy goods vehicle during the financial year.
Goods Vehicles other than heavy goods vehicles
A sum equal to Rs 7500 for every month or part of a month during which the assessee owns the goods carriage in the previous year or the amount the assessee claims to have from such heavy goods vehicle during the financial year.
An assessee, who is in possession of the a goods carriage, whether taken on hire or on installments, and for which the whole or part of the amount payable is still due, shall be deemed to be the owner of such goods carriage.
Heavy goods vehicle means as any goods carriage, the gross vehicle weight of whichexceeds 12,000 kilograms.
Allowances and Disallowances under Section 44AE
An assessee opting for the presumptive scheme under section 44AE will not be able to claim any deduction under the provisions of sections 30 to 38. For the purpose of section 44AE, any deduction under the provisions of sections 30 to 38 will be deemed to have been provided and no further deduction is allowed.
Provisions Relating to Maintenance of Books of Account and Audit
The assessee opting for the scheme need not maintain books of accounts and comply with tax audit requirements. The mandatory maintenance of books of accounts under section 44AA is not applicable to such assesses. Additionally, section 44AB relating to the audit of books of accounts also does not apply to these taxpayers.
If assessee opts for presumptive tax under Section 44AE, then they are liable to pay advance tax from the business covered under Section 44AE. And, if a person declares income at a lower rate than the prescribed one, then they need to maintain books of accounts. They audit the books as per Section 44AA and Section 44AB respectively.
TDS on payment to transporter
TDS on payment to transporter is required to be deducted under Section 194C of Income Tax Act 1961.
RATE OF TDS
- Where the payment is being made or credit is given to individual or a HUF - 1%
- Where the payment is being made or credit is given to other than individual or a HUF - 2%
The rate of TDS will be 20% in all the above cases, if PAN is not quoted by the deductee.
Time of deducting TDS
The time when TDS is required to be deducted is earlier of the following two events -
- Credit of such sum to the account of payee; or
- Payment in cash or by way of issue of cheque/ draft/ any other mode
Exemption from tax deduction
- Where the amount credited/ paid does not exceed Rs. 30,000 in a single transaction. Further, no TDS shall be deducted, where the amount or aggregate of amounts credited/ paid during the FY does not exceed Rs. 1,00,000.
- Where consideration paid by an individual or HUF is on account of personal purpose.
Provisions for payments and tax deducted at source to transporters
No deduction shall be made from any sum credited or paid or likely to be credited or paid during the previous year to the account of a contractor during the course of business of plying, hiring or leasing goods carriages, where such contractor owns 10 or less goods carriage at any time during the previous year and furnishes a declaration to the effect along with his PAN , to the person paying or crediting such sum.
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