This guide explains the GST compliance requirements for transactions between Goods Transport Agencies (GTAs). We’ll cover different scenarios including reverse charge, forward charge, registered, and unregistered subcontractors.
A Goods Transport Agency (GTA) is any entity that provides goods transportation and issues a consignment note. GTAs are subject to specific GST provisions, with tax applicability depending on the service recipient and GST charge mechanism.
When one GTA provides services to another GTA, it often falls under RCM if the service remains largely unmodified.
Client A hires GTA 1 for a shipment from Delhi to Mumbai. GTA 1 subcontracts a portion to GTA 2.
| Transaction | Service Provider | Service Recipient | Amount | GST Rate | GST Paid (RCM) |
|---|---|---|---|---|---|
| Transport (Delhi to Mumbai) | GTA 1 | Client A | 100,000 | 5% | 5,000 |
| Subcontract (Delhi to Jaipur) | GTA 2 | GTA 1 | 30,000 | 5% | 1,500 |
If a GTA opts for FCM, it charges GST directly to the recipient, which makes ITC available.
Client B hires GTA 1 for transport services. GTA 1 uses FCM and charges GST at 12%.
| Transaction | Service Provider | Service Recipient | Amount | GST Rate | GST Charged | ITC Eligibility |
|---|---|---|---|---|---|---|
| Transport (Chennai to Hyderabad) | GTA 1 | Client B | 80,000 | 12% | 9,600 | Yes |
| Subcontract (Chennai to Bangalore) | GTA 2 | GTA 1 | 25,000 | 12% | 3,000 | Yes |
If GTA 2 is unregistered, certain limitations arise, particularly on Input Tax Credit (ITC).
Client C contracts GTA 1, which subcontracts to GTA 2 (unregistered).
| Transaction | Service Provider | Service Recipient | Amount | GST Rate | GST Charged | ITC Eligibility |
|---|---|---|---|---|---|---|
| Transport (Main Service) | GTA 1 | Client C | 70,000 | 12% | 8,400 | Yes |
| Subcontract (Unregistered) | GTA 2 (Unregistered) | GTA 1 | 20,000 | N/A | None | No |
Understanding GST implications in GTA-to-GTA transactions helps optimize compliance and tax management. RCM and FCM offer different benefits, with RCM shifting liability to the recipient and FCM enabling ITC. For GTAs working with unregistered subcontractors, careful planning is essential to manage increased tax costs due to ITC ineligibility.
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