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GTA means any person who provides service in relation to transport of goods by road and issues consignment note
Importance of Consignment Note:-
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, which is serially numbered, and contains the name of the consignor and consignee, registration number of the goods carriage in which the goods are transported, details of the goods transported, details of the place of origin and destination, GSTIN of person liable for paying GST whether consignor, consignee or the goods transport agency.
Issuance of a consignment note is the essential condition for a supplier of service to be considered as a Goods Transport Agency. If such a consignment note is not issued by the transporter, the service provider will not come within the ambit of GTA. If a consignment note is issued, it indicates that the lien on the goods has been transferred to the transporter and the transporter becomes responsible for the goods till it’s safe delivery to the consignee.
A.Exemptions Available to GTA:-
- Only transport of goods by GTA or Courier Agency is taxable. Therefore if you do not issue consignment note then you are not GTA, So services of transportation by road is Exempt.
- If transporting any goods to an unregistered person,then services are Exempt.
- Services provided by a GTA, by way of transport in a goods carriage of:
- agricultural produce
- goods, where consideration charged for the transportation of goods on a consignment transported in a single carriage does not exceed one thousand five hundred rupees
- goods, where consideration charged for transportation of all such goods for a single consignee does not exceed rupees seven hundred and fifty
- milk, salt and food grain including flour, pulses and rice
- organic manure
- newspaper or magazines registered with the Registrar of Newspapers
- relief materials meant for victims of natural or man-made disasters, calamities, accidents or mishap
- defence or military equipments
Are exempt hence no GST to be charged for aforesaid supplies.
B.Reverse Charge Mechanism for GTA Services:- Reverse charge means the liability to pay tax by the recipient of supply of goods or services or both instead of the supplier of goods or services or both.
As per serial no. 1 of Notification no. 13/2017- Central Tax (Rate) dated 28-06-2017 following are the specified person who are require to deposit GST under RCM at the rate of 5% :-
- any factory registered under or governed by the Factories Act, 1948 (63 of 1948)
- any society registered under the Societies Registration Act, 1860(21 of 1860) or under any other law for the time being in force in any part of India
- any co- operative society established by or under any law
- any person registered under the Central Goods and Services Tax Actor the Integrated Goods and Services Tax Act or the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act
- any body corporate established, by or under any law
- any partnership firm whether registered or not under any law including association of persons
- any casual taxable person
The person who pays or is liable to pay freight for the transportation of goods by road in goods carriage, located in the taxable territory shall be treated as the person who receives the service i.e. service recipient.
C.Liability of GTA to take Registration:-
(i)A person who is engaged in making only supplies of taxable goods/services on which reverse charge applies is exempted from obtaining registration under GST.
Therefore, a GTA does not have to register under GST if he is exclusively transporting goods where the total tax is required to be paid by the recipient under reverse charge basis (even if the turnover exceeds 20 lakhs).
Hence No registration required if providing services @ 5% without ITC i.e. providing exclusively RCM supplies
Please note that this is not applicable for interstate transactions since section 24(i) mandates compulsory registration in case of interstate transactions irrespective of threshold limit. Further, registration is required in a state from where supply is made and not where supply is made.(for interstate transaction determination,refer point D below)
GTA services are covered by RCM but if they are only to specified persons as per Notification no. 13/2017- Central Tax (Rate) dated 28-06-2017. List of specified person is provided in point (a) to (g) of serial no. 1 of Notification no. 13/2017- Central Tax (Rate) dated 28-06-2017.
(ii)As per serial no. 18 of Notification no. 12/2017- Central Tax (Rate) dated 28-06-2017 transportation of goods by road except GTA and Courier Agency is exempt. There is no liability of registration for such service providers.
(iii) If entire turnover is exempt or If aggregate turnover( including exempt supplies) is below 20Lakh limit.There is no liability of registration for such service providers.
Rates of GST:-
Forward charge mechanism – GST @ 6% CGST (with ITC)
Reverse charge mechanism – GST @ 2.5% CGST (without ITC and to be paid by service recipient)
D.Place of Supply for GTA Services:- If services provided to a registered person, place of supply will be location of such person.
If services provided to a person other than a registered person, place of supply will be location at which such goods are handed over for their transportation.
However, where the location of supplier of services or the location of recipient of services is outside India, place of supply of services of transportation of goods by GTA shall be the place of destination of such goods.
As per serial no. 21A of Notification No. 32/2017- Central Tax (Rate) dated 13.10.2017 services provided by a goods transport agency to an unregistered person, including an unregistered casual taxable person is exempt.
II. UNDER Income tax act:
The scheme of section 44AE is designed to give relief to small assessees engaged in the business of goods carriage. The detailed provisions in this regard are as follows:
To whom the provisions of section 44AE are applicable?
Applicability of the scheme
The provisions of section 44AE are applicable to every person (i.e., an individual, HUF, firm, company, etc.).
Unlike section 44AD, in case of section 44AE there is no restriction on which categories of assessees can opt for the scheme.. All sorts of assessees can opt from this scheme.
Which business is eligible for the purpose of scheme prescribed under section 44AE?
The presumptive taxation scheme under these provisions can be opted for by an assessee who is engaged in the business of plying, hiring or leasing goods carriages and does not own more than ten goods vehicles at any time during the previous year.
The important criteria in this scheme is the restriction of owning more than 10 goods vehicles at any time during the previous year. Thus, if an assessee is owning more than 10 goods vehicles during the year, then such an assessee cannot adopt this scheme.
Further, this scheme can be adopted only by the assessees who are engaged in the business of plying, hiring or leasing goods carriages. Thus, an assessee engaged in the business of passenger transport cannot adopt these provisions.
How presumptive income is computed under section 44AE?
Scheme of computation of income
In case of an assessee who is willing to opt for these provisions, income will be computed on an estimated basis. The rate of computation of income on estimate basis is as follows :
In respect of heavy goods vehicle :
For Heavy Goods Vehicle, income will be computed at the rate of Rs. 1,000 per ton of gross vehicle weight for every month or part of a month during which the heavy goods vehicle is owned by taxpayer
In respect of other goods vehicle :
In case of vehicles other than heavy goods vehicle, income will be computed at the rate of 7,500 for every month or part of a month during which the goods carriage is owned by taxpayer. Part of the month would be considered as full month.
Note 1 : If the actual income is higher than the presumptive rate, i.e., higher than Rs. 1 ,000/Rs. 7,500, then such higher income can be declared.
Meaning of Goods vehicle (carriage) and heavy goods vehicle:
The expressions “goods carriage” and “heavy goods vehicle” shall have the meanings respectively assigned to them in section 2 of the Motor Vehicles Act, 1988
Clause (14) and clause (16) of section 2 of the Motor Vehicles Act, 1988, define “goods carriage” and “heavy goods vehicle”, respectively, as follows :
“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;
“Heavy goods vehicle” means any goods carriage the gross vehicle weight of which, or a tractor or a road-roller the unladen weight of either of which, exceeds 12,000 kilograms;
Can an assessee covered by section 44AE declare lower income as compared to income specified in section 44AE?
Declaration of lower income
If the actual income from the business covered under section 44AE is lower than the income prescribed under the presumptive scheme, then the assessee can declare income from aforesaid business at a lower rate.
If the assessee does so, i.e., declares lower income, then the relief from maintenance of account in not available and he is required to maintain the books of account as per section 44AA and further, he has to get such books of account audited as per section 44AB.