Before getting into the situation to pay tax on transportation services, let’s learn how these services are exchanged and work in our daily lives.
The transport services in India are provided by GTA i.e. Goods Transport Agency. This agency moves/transport/shifts the goods from one place to another by road. The carrier includes truck, auto-rickshaw-rickshaw, etc. and also issues/raises a consignment note for the same. GTA can only raise a consignment note while a regular transporter can issue any other document than a consignment note. This is the feature that differentiates a GTA from a regular transporter. The consignment should contain all the details mentioned below
- Serial number
- Name of the supplier and the recipient of the services
- Registration number of the vehicle used to transport goods or render services
- Details of the good being transported
- The place of origin and the destination of the transported good
- Name of the person who is liable to pay tax on transportation charges
The GST rate is 5% for the transportation of goods or services
List of goods that are exempted from the GTA services and hence there is no liability on anyone to pay tax. All the items are covered in heading 9965, 9967 under notification 12/2017.
- Agricultural products
- If the rent of a truck transporting a good is not more than Rs. 1500 then the nobody is liable to pay tax
- If the per person charge is not more than Rs. 750 in a situation when goods of four to five people are being transported by a single truck/vehicle.
- Essential items like salt, milk, food grains (flour, pulses wheat, and rice).
- Organic manure
- Newspapers or magazines registered under the Registrar of Newspapers
- Transportation of relief items during natural calamities, floods, or man-made disasters
- Transportation of military or defense equipments
Now let us look at the situation in which a GTA service provider/supplier and the recipient/customer is liable to pay tax under GST on transportation charges.
Note: All the people registered under GST Registration are subject to RCM while availing the services from the registered supplier/GTA.
The GTA need not be mandatorily registered under GST Registration Online when they are transporting their goods to registered recipients who are liable to tax under RCM.
Some registered bodies on which RCM is applicable are mentioned below:
- A person registered under GST law
- Any corporate entity
- A partnership firm registered under GST
- A registered factory
All these registered bodies are liable to pay a 5% tax to the government on availing the services from GTA who has raised an invoice.
- If a GTA has given its services to another GTA then the latter will be liable to pay a tax to the government as it is a recipient in this case but none of them can claim ITC.
- If you are renting your vehicles to GTA for transport of goods then you exempted from paying tax. There is no liability on you to pay the tax.
- If you are transporting the goods by auto-rickshaw or E-rickshaw then there is no tax liability on you.
- A registered GTA is liable to pay tax when it provides its services to unregistered sole proprietor, unregistered Hindu Undivided family, and unregistered Body of Individuals. GTA cannot claim ITC.
However, none of them is liable to pay tax if the GTA providing its services is also unregistered.
- If an unregistered individual or business (having less than 20 lakh turnover) is availing the services from GTA then GTA is liable to collect the tax and pay it to the government.
- If you are taking the services or goods from an unregistered supplier and the whole consignment doesn’t exceed Rs. 5000 then you are not liable to pay tax.
However, if the consignment exceeds Rs. 5000 then you will raise an invoice and the liability to pay tax falls on you.
- If a supplier is transporting goods to the recipient on its own then the liability to pay the tax depends on the mutual understanding between them.
- If the supplier takes the freight for the transportation services from you then he is liable to pay tax.
But if the recipient says that will pay the freight then he is liable to pay the 5% tax to the government.
Let us talk about the situation in which you transport via courier services. You have to pay an 18% tax to for availing the services.
When you transport with the help of railways then there are two cases.
If you are transporting your goods via train according to the weight then you are liable to pay 5% GST.
If you have booked a coach of the train for transporting your goods then you are liable to pay 12% GST but you can claim ITC for the same.