Is courier cgarges a composite supply?

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This discussion clarifies whether courier charges, when recovered from a client as part of an invoice for goods taxed at 3% GST, constitute a composite supply. The consensus is that if the courier service is ancillary to the main supply of goods, it should be treated as a composite supply. Therefore, the GST rate applied to the courier charges should match the rate of the primary goods (3%), rather than the higher rate charged by the courier company (18%).

tarun singh

tarun singh (Querist)

27 August 2024 Our product falls in 3% GST rate. We recover courier charges from our client by mentioning the same in the invoice itself.The issue is that- courier company charges 18% to us.How should we charge the same from our client and at what rate??

Dhirajlal Rambhia

Dhirajlal Rambhia

(Expert)

27 August 2024 Don't you get ITC of the 18% GST paid to courier?
You need to charge only the service charges paid to the courier.

tarun singh

tarun singh (Querist)

27 August 2024 Yes i get ITC of 18% but supply of goods with transportation services it establishes composite supply.So should we charge 3% on delivery charges instead of 18%?

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Dhirajlal Rambhia

Dhirajlal Rambhia

(Expert)

27 August 2024 Yes, as per the original goods rate.

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Dhirajlal Rambhia

Dhirajlal Rambhia

(Expert)

28 August 2024 You are welcome.

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