In our last article, we have discussed GST exemption for passengers transport services, charitable or religious services, health care services, educational services. In this port we have discussed above GST exemption for goods transport services.
Goods transport services are exempted from GST vide notification number 12/2017. Remember, it’s exempted only if conditions mentioned in the notification is satisfied, otherwise it will be taxable as per GST law.
GST exemption for transportation by road
As per entry number 18 of notification number 12/2017, Services by way of transportation of goods by road are exempt from GST. However, this exemption is not applicable to a goods transportation agency, a courier agency.
Exemptions from GST related to services by a goods transport agency are discussed below in this post as we have a specific entry for it in the notification.
If services by way of transportation of goods are by inland waterways, then such service is exempt from tax.
GST exemption for Transportation by rail or a vessel
Exemption under GST law is allowed when the services is by way of transportation by rail or a vessel from one place in India to another of the following goods –
(a) relief materials meant for victims of natural or man-made disasters, calamities, accidents or mishap;
(b) defence or military equipments;
(c) newspaper or magazines registered with the Registrar of Newspapers;
(d) railway equipments or materials;
(e) agricultural produce;
(f) milk, salt and food grain including flours, pulses and rice; and
g) organic manure.
GST Exemption for Goods transport agency service
As per the notification, 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.
Issue of consignment note is a must for goods transport agency to take benefits of GST exemption. If such consignment is not issued then the transporter will not be considered as a goods transport agency for the purpose of GST exemption.
Consignment note is a document issued by a GTA against the receipt of goods for the purpose of transportation of goods by road. It indicates that the lien on the goods are transferred to the transporter and the transporter is responsible for the safe delivery of goods to the consignee.
Individual truck or temp operators who do not issue consignment notes are covered in entry number 18 discussed above in this post. As per entry number 18, services by way of transportation of goods by road except the services of a goods transportation agency, a courier agency are exempt from GST. Therefore, individual truck or tempo operators will be exempted from goods and services tax.
As stated in the definition of goods transport agency, service in relation to transport of goods includes:
- Loading or unloading charges
- Packing or unpacking charges
- Transhipment and temporary warehousing
- Any other intermediary and ancillary services
When such services are included in the invoice, it will be treated as a composite supply of services. If such services are not included in one invoice and charged separately in a different invoice, then they shall be treated as separate supply.
As per entry number 21 of circular 12/2017, Services provided by a goods transport agency, by way of transport in a goods carriage of –
(a) agricultural produce;
(b) goods, where consideration charged for the transportation of goods on a consignment transported in a single carriage does not exceed 1,500 rupees;
(c) goods, where consideration charged for transportation of all such goods for a single consignee does not exceed rupees 750;
(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.
is exempt from GST.
As per entry number 21A, Exemption from GST is available if the services are provided by a goods transport agency to an unregistered person, including unregistered casual taxable person, other than the following recipients namely:-
- Any factory registered under/governed by the Factories Act, 1948; or
- Any society registered under the societies registration Act, 1860 or under any other law for the time being in force in any part of India; or
- Any co-operative society established by under any law for the time being in force; or
- Any body corporate established, by or under any law for the time being in force; or
- Any partnership firm whether registered or not under any law including association of persons;
- Any casual taxable person registered under the central goods and services tax act or the integrated goods and services tax act or the state goods and services tax act or the union territory goods and services tax act.
Which means, goods transport agency (GTA) services provided to a factory, society, co-operative society, body corporate, partnership firm, association of persons and a registered casual taxable person are liable to GST. In other words, goods transport agency (GTA) services to unregistered individuals are only exempted from GST.
As per entry 21B, services provided by a goods transport agency by way of transport of goods in a goods carriage to –
- A department or establishment of the central government or state government or union territory; or
- Local authority; or
- Government agencies, which has taken registration under the central goods and services tax act, 2017 only for the purpose of deducting tax u/s 51 and not for making a taxable supply of goods or services.
is exempt from GST.
Goods carriage means any motor vehicle constructed or adapted for use solely for the carriage of goods, or any motor vehicle not so constructed or adapted when used for the carriage of goods.
Mr. ABC owns a truck and carries goods himself without issuance of consignment note. In such a case, services provided by ABC is not a goods transport agency service, hence falling under entry number 18 of the notification to get exemption from GST.
Assume for a moment, instead of operating on his own, he has rented the truck to XYZ Roadways, which is a goods transport agency. In such case, services by way of transport of goods by the GTA will be exempted as per entry number 22 of the notification 12/2017. Entry number 18 will not be applicable in this case.
Courier agency means any person engaged in the door-to-door transportation of time-sensitive documents, goods or articles utilising the services of a person, either directly or indirectly, to carry or accompany such documents, goods or articles.