Goods Transport Agency under GST
What is GST?
Goods and Services Tax, infamously known as GST, came into effect on 1st July 2017 to replace all the indirect taxes on goods as well as services and to introduce a comprehensive indirect tax in its place. In other words, GST is one uniform indirect tax, right from the manufacturer to the consumer. What make GST attractive to the mass are its easy compliance, transparency and uniformity of tax rates and structures. GST also aimed to curb the overall inflation and has various advantages over previous tax regime and some of its major advantages are listed as below:
GST on transport
Implementation of GST has it positive effect on almost all sectors; however it is the transport industry which had a major effect on it. For any country, its transportation industry plays a pivotal role in the development of its economy and India, is no exception to this. In India, transport industry, mainly the road transport plays quite an indispensable and pivotal role in the overall economy development and it could easily be termed as the backbone of the country.
As per the National Highways Authority of India, about 80% passenger traffic and approx 65% of freight traffic is being carried by the road transport. Before GST, every state has its own tax policy and thus different tax rates were levied on the goods or services passing through the states. However, after GST was implemented on 1st July 2017, a unilateral tax rate was imposed through all the states.
In India, apart from road transport, three other modes of transport are used such as airways, railways and waterways and thus give the flexibility to use multimodal transport method as and when required. These modes of transport are subject to different GST rates i.e. transportation of goods by road is subject to GST of 5% or 12% whereas transportation of goods by airways is subject to GST of 18% and transportation of goods by waterways and railways is subject to GST of 5% and 12% respectively.
The introduction of GST has primarily a very positive effect on the transport sector majorly because it has increased the pace of movement of consignments from place A to place B via multimodal transport i.e. air, water, land and sea. Main reason behind why the shipments were moving faster than before was because implementation of GST has dismantled checkpoints and also with the introduction of e-way bill, the checkpoints procedures became less tedious for the drivers. Main advantages of GST on the transport can be summed up in below mentioned points:
Considering multimodal transport system existing in the country, the government has planned to establish various multi-modal logistics parks like one undertaken in the Prime Minister PM Modi’s constituency which aims serve as a gateway connecting North to East with terminals for waterway, road, rail and have storage facilities as well. GST, though claims to have uniform tax structure PAN India however it has varying rates for various modes of transport and industry wants to have a single tax rate to ensure seamless transaction from the factory to the end consumer.
Good Transport Agency (GTA) under GST:
Referring Section 65B (26) of the Finance Act 1994: Good transport agency i.e. GTA means any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called. Under GST laws, GTA is defined in the same manner in clause (ze) of notification no. 12/2017- Central Tax (Rate) dated 28.06.2017. Issuing of consignment note had been an integral part of the tax regime even before GST was implemented.
In the industry term, a 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 and has details like serial number, name of the consigner, registration number of the goods carriage, details of the good transported, origin and destination and who is liable to pay the tax whether the consignor, consignee or the goods transport agency.
Apart from the actual transportation of goods, GTA performs various other intermediate services like loading/unloading, packing/unpacking, trans-shipment, temporary warehousing etc and there are certain services provided by GTA which are exempt from payment of GST, such as:
Same exemptions are applicable to transport via railways, waterways and roadways and thus it is quite clear that not all the transport of goods is done by GTA and for it to qualify as services of GTA, it should have a consignment note. And to summarise, the GST laws list down same laws prevailing under previous tax regime and it recognizes the very fact that most of the transportation of goods and services are provided by those who are in the unorganized sector.
Implementation of GST in the transport sector has been primarily positive which of course has its own share of improvements with due course of time and as compliance with the law will increase, chances of India to compete globally increase multifold. Also the implementation of GST has unorganized the previously unorganized transport sector and thus creates a more effective multimodal transportation which will reduce logistic costs and improve imports and exports in the country and if to go by the pulse of industry, having one GST rate on all multimodal transport will not only reduce the burden of the manufacturers and the transports but will also gives a better and effective transportation services across the nation.