GST Knowledge Series: Questions and Answers On GST For Transportation Of Goods By Road [Part 1]

The service of transportation of goods by Road is one major expense incurred by any manufacturer/trader for their inward/outward supply of goods. Such transactions are always subject to scrutiny by GST department due to the lack of compliance owing to divergent practices. To bring clarity, the following important issues are addressed.

1. What is the scope of GST levy on transportation of goods by Road?

Answer: Under GST, transportation of goods by road is treated as a supply of service under Section 7 of the CGST/SGST Act, 2017. However, the GST on transportation of goods by road is payable only when services are provided by a Goods Transport Agency (GTA)—that is, a transporter who issues a consignment note. Transportation of goods by road (other than GTA and courier services) is exempt from GST. Hence, truck owners or operators who do not issue consignment notes are exempt.

2. What is GTA?

Answer: GTA stands for Goods Transport Agency. As per Paragraph 4 (xxxx) of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017,"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; but does not include:

(i) electronic commerce operator by whom services of local delivery are provided;

(ii) electronic commerce operator through whom services of local delivery are provided

3. What is consignment note and how is it relevant for GST on transportation of goods by road?

Answer: A consignment note is a document issued by a transporter when it undertakes the responsibility of transporting goods by road, and it serves as proof that the transporter has accepted custody of the goods for delivery.

Although the term is not defined under GST law, guidance is taken from the Explanation to Rule 4B of the Service Tax Rules, 1994, which describes a consignment note as a serially numbered document containing details such as the names of the consignor and consignee, the registration number of the goods carriage, particulars of the goods transported, the place of origin and destination.

Its relevance under GST lies in the fact that the issuance of a consignment note is the defining feature of GTA services; only when such a note is issued, GST is liable to be paid. In contrast, transporters who do not issue consignment notes are not treated as GTAs and their services remain exempt from GST.

4. What are the applicable rates for transportation of goods by GTA?

Answer: Currently, the following are the applicable rates for transportation of goods by GTA:

Nature	Rates	Condition
GST payable by the recipient of service under RCM	5%	The credit of input tax charged on goods and services used in supplying the service has not been taken
GTA exercises the option to pay GST under forward charge	5%
	18%	-

5. What are the exemptions available for services by GTA?

Answer:

The following are the exemptions available to services provided by a goods transport agency under Notification No. 12/2017 – CT (Rate):

Sl.No.21- Services provided by a goods transport agency, by way of transport in a goods carriage of-

(a) Agricultural produce

(b) milk, salt and food grain including flour, pulses and rice;

(c) organic manure;

(d) newspaper or magazine registered with the Registrar of Newspapers;

(e) relief materials meant for victims of natural or man-made disasters, calamities, accidents or mishap; or

(f) defence or military equipments.

Sl.No-21A. Services provided by a goods transport agency to an unregistered person, including an unregistered casual taxable person, other than the following recipients, namely: -

(a) any factory registered under or governed by the Factories Act, 1948(63 of 1948); or

(b) 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; or

(c) any Co-operative Society established by or under any law for the time being in force; or

(d) any body corporate established, by or under any law for the time being in force; or

(e) any partnership firm whether registered or not under any law including association of persons;

(f) 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.

Sl.No. 21B. Services provided by a goods transport agency, by way of transport of goods in a goods carriage, to, -

(a) a Department or Establishment of the Central Government or State Government or Union territory; or

(b) local authority; or

(c) Governmental agencies,

which has taken registration under the Central Goods and Services Tax Act, 2017 (12 of 2017) only for the purpose of deducting tax under Section 51 and not for making a taxable supply of goods or services.

6.Whether transportation provided by transporters other than GTAs are liable for GST?

Answer: Sl. No. 18 of Notification No. 12/2017–Central Tax (Rate) provides exemption for services by way of transportation of road by persons other than GTA.

Please send your queries to info@livelawbiz.com

Disclaimer: The content presented in this GST Q&A Series is intended solely for academic discussion and general informational purposes. It should not be construed as legal, tax, or professional advice. The views expressed are general in nature and may not apply to specific factual situations. Readers and viewers are strongly advised to seek independent professional advice before taking any action based on the information provided. The platform and contributors disclaim any liability arising from reliance on this content.