Freight liability

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This discussion addresses whether Reverse Charge Mechanism (RCM) applies to local freight services where individual values exceed £750 but no consignment notes are issued. Experts suggest that if a consignment note isn't provided, the transporter isn't technically a Goods Transport Agency (GTA), potentially exempting the transaction from RCM. However, it's advised that paying RCM might be prudent to avoid departmental scrutiny, as the tax paid can be claimed as Input Tax Credit (ITC).

Rakesh Sharma

Rakesh Sharma (Querist)

21 September 2021 Respected Experts, we give freight to local vehicles that have not issue consignment notes and individual freight value is more than 750/-.

Should we pay RCM on the above transactions?

Please advise

Rakesh Sharma

Udaya Chandran

Udaya Chandran (Expert)

21 September 2021 RCM is applicable when the services provided by GTA for transportation of goods by road. In order to be eligible as GTA, one of the conditions is to issue consignment note. If consignment note is not issued by the transporter, then they are not considered as GTA. But the department may insist on payment of tax under RCM.

As per my opinion, you need not to pay tax under RCM. However there is no loss in paying so as the tax paid shall be available as ITC and also avoid any issues with the department.

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Rakesh Sharma

Rakesh Sharma (Querist)

21 September 2021 Very well explained, thanks a lot Sir

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