Service Tax on GTA

Few years ago, whenever I used to hear ‘GTA’, the first thing that used to come to my mind was ‘Grand Theft Auto’. Things change and so did I. Now ‘Goods Transport Agency’ flashes instantaneously. Though some people take Service Tax for granted, forcing Indian Government to come up with VCES (which is very brave step). Any way I will not get into all that now.

GTA means any person who provides service in relation to transport of goods by road and issues consignment note. Now, there are two very vital things that we need to keep in my mind:

a)   Transportation of goods should be via Road.

b)   Service provider should have issued a consignment note.

The question we need to ask ourselves is, Who is liable to pay the tax on the service? For that, we first need to know about ‘Reverse Charge Mechanism’. As the name suggests, in certain services, Service receiver is liable to discharge the Tax to the Government. GTA also comes under this mechanism.

But how do you determine who is receiving the service? (Questions….questions..Indian Law) If the goods are booked on ‘freight to pay’ basis, the consignee will be liable if he falls under any one of the specified categories. If goods are booked ‘freight paid’ basis, consignor will be liable, if he falls under the specified categories.

The Service receiver also gets an exemption of 75%, thereby making him liable only for 25% on Gross Amount.

However, the big bummer in this service is that, there is no Credit on Input Services to GTA available. This condition was there when service tax on GTA was introduced but later was removed. Unfortunately, the impractical condition has been brought back.

GTA has many provisions which are practically difficult. Hopefully, they will be amended. Sad part is that I cannot cover up everything due to obvious practical difficulties. I hope now everyone will think of  Goods Transport Agency when they come across 'GTA'.