TaxTMI 
TaxTMI 
Applicability of GST for hiring out trucks
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....pplicability of GST for hiring out trucks<br> Query (Issue) Started By: - Sudipta Dey Dated:- 1-6-2025 Last Reply Date:- 3-6-2025 Goods and Services Tax - GST<br>Got 7 Replies<br>GST<br>A registered person has some trucks. He hires out his trucks to individuals (registered/ un-registered) for goods transport. He in return receives Hire charges and the same is booked in balance sheet and profit and loss accounts, but mentioned as exempted supply in GSTR-9 and GST is not paid accordingly. Why is it exempted? Under which conditions is it exempted and what is the valid notification? What are the documents to be maintained by the taxpayer to hire charges be an exempted supply? Reply By KASTURI SETHI: The Reply: Exempted vide Notification....
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.... No.12/17-CT (R) dated 28.06.2017 as amended up to 16.1.2025. Serial No.22 refers. Service Accounting Code is 996601 Reply By Sadanand Bulbule: The Reply: Yes Sir. vide Entry (b) of Sl No.22 of Notification No.12/2017-CTR dated 28/06/2017 which provides exemption of tax on notified services. Reply By Sudipta Dey: The Reply: Sir, if it is exempted then what are the documents to be maintained by the truck owner in this case? The truck owner needs to reverse the ITC of truck purchase in terms of section 17(3) of CGST Act 2017 read with rule 43 of CGST Rules 2017? Reply By Sadanand Bulbule: The Reply: Refer CBIC Circular No. 214/8/2024-GST dated 26th June, 2024 which also covers the query under discussion. Reply By YAGAY andSU....
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....N: The Reply: The activity of hiring out trucks for the transportation of goods can qualify as an exempt supply under GST, but only under specific conditions. Below is a legal analysis covering the reasons for exemption, applicable notifications, conditions, and required documentation. 🔹 Why is it Exempted? The hiring of trucks for the transport of goods is considered exempt from GST only when it falls under the service category of "transportation of goods by road by a goods transport agency (GTA), excluding courier and express cargo services", or when the service provider is not acting as a GTA, but merely renting out the vehicle without any control over the transportation. 🔹 Applicable Notification The exemption is pr....
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....ovided under: * Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 * Entry No. 22(b) of the notification Exemption Entry: Services by way of giving on hire to a goods transport agency, a means of transportation of goods. This means that if the registered person hires out trucks to a GTA, that hiring service itself is exempt from GST. Additionally, Entry 22 of the same notification also provides exemption for: Services by way of transportation of goods by road (except the services of a goods transport agency and courier agency). So, if the person is not acting as a GTA (i.e., does not issue a consignment note), and merely provides the truck to others for their own use, he is not considered a GTA, and the activity may fall....
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.... under exempt services. 🔹 Conditions for Exemption * No Consignment Note Issued: If the truck owner does not issue a consignment note, he is not a GTA as per GST law, and his activity does not attract GST. * Not Providing Transport as a GTA: If the truck is merely being rented out without any liability for the goods or transport logistics, then it is a mere hiring service and can fall under the exemption. * Hiring Given to a GTA (not end user): If the hiring is to a GTA (who in turn transports goods), the hiring charges are exempt under Entry 22(b) of Notification 12/2017. 🔹 Documents to Be Maintained To establish that the activity qualifies as exempted supply, the following documents should be maintained by t....
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....he taxpayer: * Rental/Hire Agreement or Contract: Clearly stating the terms, duration, and nature of hiring - particularly that the truck is hired without driver/logistics service, i.e., not a transport service. * Invoices or Receipts for Hire Charges: Clearly mentioning that the transaction is for "hiring of goods vehicle", not for transport service. * Declaration of No Consignment Note: Maintain a self-declaration or system-generated statement showing that no consignment note was issued in any transaction. * Ledger/Accounting Records: Books of accounts must clearly show hire income separately under exempted income heads. * GST Returns (GSTR-1 and GSTR-9): Exempted supplies must be properly reported in Table 8 of GSTR-1....
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.... and relevant sections of GSTR-9. 🔹 Important Note on GTA Definition As per Notification No. 11/2017-Central Tax (Rate), a GTA is defined as: "Any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called." So, issuance of a consignment note is the key test to determine whether a person is a GTA. If no consignment note is issued, the person is not a GTA, and his activity could fall under exempted services. ✅ Conclusion The activity of hiring out trucks is exempted from GST under Notification No. 12/2017-Central Tax (Rate), Entry 22, subject to the condition that: * The person does not issue a consignment note (i.e., is not a GTA), or * The trucks are hi....
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....red to a GTA for transport use. Maintaining proper documentation and evidence is critical to substantiate the exemption during audit or scrutiny. Reply By Sudipta Dey: The Reply: Thank you for the extensive information and advice.I am grateful to all of you sir Reply By Shilpi Jain: The Reply: Exemption is available in the law for vehicle rented to a GTA. Ensure you have mentioned in the invoice or the agreement that the trucks are hired for providing GTA services. Also ensure that the person you have hired the truck to is actually a person providing transportation services and take a declaration from him at the end of every FY that all the hires were used for providing GTA services. Reversal of credit will be required as you a....
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....re providing exempt services. Further, in case you have no other income i.e. you have only exempt income you can consider to cancel your GST registration also.<br> Discussion Forum - Knowledge Sharing ....