GST on Goods Transport Agency (GTA) — Reverse Charge, Rates and Compliance

GST on Goods Transport Agency (GTA) services has a unique structure — the tax can be paid either by the GTA (transport company) under forward charge or by the service recipient (business hiring the truck) under reverse charge. Getting this right is essential for both transporters and businesses that hire transport services. Here is the complete guide.

What is a GTA?

A Goods Transport Agency is any person who provides services in relation to transport of goods by road and issues a consignment note (bilty). Simply hiring a lorry/truck driver is NOT a GTA service — issuing a consignment note is what makes the transporter a GTA for GST purposes.

GST Rate Structure for GTA

GTAs have two options:

• Option 1 — Reverse Charge at 5% (No ITC for GTA): The service recipient (business entity hiring transport) pays 5% GST under RCM. The GTA does not charge GST on its invoice and cannot claim ITC on its inputs.
• Option 2 — Forward Charge at 12% (ITC available): The GTA charges 12% GST on the invoice and pays it to the government. The GTA can claim ITC on its inputs (fuel, tyres, repairs, etc.). The service recipient can also claim ITC on the 12% GST paid.

From FY 2022-23, GTAs must make an annual declaration of their chosen option in Form FORM-GTA-01 by 15 March of the preceding year. Once declared, the option applies for the full financial year.

Who Must Pay Reverse Charge GST for GTA?

Under RCM (Option 1), the recipient pays GST if they are a GST-registered person and the service is used for business. Recipients who must pay RCM on GTA services include:

• Any factory registered under Factories Act
• Any society, co-operative society, trust, or body corporate
• Any firm including LLP, partnership, company
• Any person registered under GST

Exemptions from GTA GST

GTA services are exempt from GST when transportation is of: agricultural produce, milk, salt, food grains, pulses, flour, newspapers/magazines, relief materials for flood/drought victims, or where the consideration charged per consignment does not exceed ₹1,500 or per carriage of goods does not exceed ₹750.

Conclusion

GTA GST involves careful analysis of the transporter's option and the recipient's obligations. SPOTON provides comprehensive GST advisory for transport businesses and businesses hiring GTA services across Kerala. Contact us for expert GST compliance services.