GST on Goods Transport Agency
GST on Goods Transport Agency was initiated by Finance Act 2004 and exemption up to Rs. 750/- towards consideration for transportation per consignee ; and exemption up to Rs. 1500/- towards consideration for transportation per carriage is applicable since 01-01-2005. This exemption stands withdrawn w.e.f. 18-07-2022. Hence all consignment notes for freight below Rs. 750/- and where freight for single carriage is up to Rs. 1500/- shall also be taxable at par with freight of higher volume.
Present scheme of taxation for goods transport agencies provides exemption for service of transportation of goods provided to unregistered persons except specified entities as factory, society, cop society, body corporate, partnership firm, registered casual taxable person. Registered persons are required to pay tax under RCM @ 5% except on carriage of agri produce, ,milk, salt and food grain including flour, pulses and rice, organic manure, newspapers or magazines registered with registrar of newspapers, relief material for victims of natural or manmade disasters, calamities, accidents or mishap. Apart from 5% tax under RCM, goods transport agency was provided once in life time option to pay tax @ 12% under forward charge by availing ITC.
However, vide NN 3/2022 dated 13-07-2022, while RCM @ 5% continues in the hands of registered persons liable to pay freight, goods transport agency has been provided dual option under forward charge.
One option is that the goods transport agency pays tax @ 5% under forward without availing ITC. 2nd Option is that goods transport agency pays tax @ 12% under forward charge by availing ITC. These options are required to be exercised once in every financial year independently.
However option for 2022-23 can be exercised by 16-08-2022 while option for 2023-24 and onwards is required to be exercised on 15th March preceding the beginning of the financial year. Option for 2023-24 shall be exercised till 15-03-2023.
If an option is exercised by a goods transport agency it needs to mention a declaration on every tax invoice cum consignment note that option has been exercised on this behalf*. Registered persons liable to pay freight in such a case need not pay tax under RCM on freight covered by such invoices bearing declaration. Option to pay tax under forward charge to be exercised every year.
Further renting of goods carriage with the operator and where cost of fuel is included in consideration* charged from service recipient shall be taxable @ 12%.by virtue of NN 3/2022 dated 13-07-2022. Renting of goods carriage with an operator where cost of fuel is not included in the consideration is taxable @ 18%.
However, Services by giving on hire to a goods transport agency , a means of transportation of goods are exempt under entry 22(b) of NN 12/2017.
