GST on Builty amount
This query is : Resolved
20 August 2017
Dear Sir/ Madam
I purchase goods from gujrat. GTA co. send builty of 550 Rs. to his office agent which is situated in my area. after delivery of goods agent send memo of 625 Rs. in which he includes delivery charge and service charge..
so plz tell me on which amount i pay GST as per RCM method and why.....
Message likes :
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20 August 2017
The amount is less than 750 exempt from gst.
20 August 2017
if it is 825 Rs then what is the treatment...
is there Gst on 825 or 550
20 August 2017
and what is the tratment if i receive 2 builty of 625 Rs. same day
26 July 2024
In GST, the treatment of the builty amount and additional charges for goods transportation involves understanding how GST applies to various components of the transaction, especially under the Reverse Charge Mechanism (RCM). Here's a detailed explanation:
### **1. GST Treatment of Transportation Charges Under RCM**
**a. **Reverse Charge Mechanism (RCM):**
- **Applicable GST:** Under GST, the Reverse Charge Mechanism (RCM) is applicable to certain services where the recipient is liable to pay the tax instead of the supplier. For transportation services, RCM is applicable under the following conditions:
- The service is provided by a Goods Transport Agency (GTA).
- The recipient of the service is a registered person.
**b. **Transportation Charges and GST:**
- **Builty Amount (Rs. 550):**
- This amount is the base amount for the transportation service provided by the GTA. Under RCM, the GST is calculated on this amount.
- **Additional Charges (Rs. 625):**
- The additional charges included in the memo are the delivery charge and service charge. If these charges are also for the transportation service, they are part of the taxable value. The total amount (Rs. 625) reflects the total charge for the transportation service.
### **2. GST Calculation and Reporting**
**a. **GST on Builty Amount:**
- **Base Amount (Rs. 550):**
- Since GST under RCM applies to the transportation service provided by a GTA, GST should be paid on this amount.
- **GST Rate:**
- Typically, the GST rate on transportation services provided by a GTA is 5% (2.5% CGST + 2.5% SGST) or 12% (6% CGST + 6% SGST) if the service involves inter-state transportation. The rate should be confirmed based on the specific service and location.
**b. **GST on Additional Charges:**
- **If Charges Include GST:**
- If the additional charges (Rs. 625) include GST on the transportation services, then you need to determine if this total amount includes GST or if GST is separately mentioned.
- **If Separate Charges:**
- If GST is not separately mentioned and the total charge is inclusive, you should calculate GST based on the total amount paid.
### **3. Treatment of Multiple Bills**
**a. **Receiving Multiple Bills:**
- **Multiple Invoices (Rs. 625 Each):**
- If you receive multiple invoices (e.g., two invoices of Rs. 625 each), each invoice should be treated separately. You need to apply GST to each invoice based on the total amount.
### **4. Summary of GST Treatment**
**a. **Single Invoice of Rs. 625:**
- **GST on Total Amount:**
- If the invoice of Rs. 625 is inclusive of GST, then the amount should be taken as the total value including GST. You need to calculate the GST component and adjust it according to the total value.
**b. **Two Invoices of Rs. 625 Each:**
- **Total Value and GST:**
- If you receive two separate invoices of Rs. 625 each, then you should calculate GST separately for each invoice based on the applicable GST rate. The total value for GST calculation will be Rs. 625 + Rs. 625 = Rs. 1250.
### **Practical Steps:**
1. **Determine GST Rate:**
- Check whether the amount includes GST or if GST is separately mentioned.
2. **Calculate GST:**
- If the amounts are inclusive of GST, back-calculate the GST based on the rate applicable (e.g., 5% or 12% for GTA services).
3. **Report and Pay GST:**
- Report the GST liability in GSTR-3B under the RCM section and pay the applicable GST.
4. **Maintain Documentation:**
- Keep records of all invoices, including the detailed breakdown of charges and GST.
### **Example Calculation:**
**If the amount of Rs. 625 includes GST (say at 5%):**
- **Amount before GST:**
- Rs. 625 / 1.05 = Rs. 595.24 (approx.)
- **GST Component:**
- Rs. 625 - Rs. 595.24 = Rs. 29.76 (approx.)
**If you receive two invoices:**
- **Total Amount:**
- Rs. 625 + Rs. 625 = Rs. 1250
- **GST Calculation:**
- Total GST on Rs. 1250 at 5% = Rs. 1250 * 5% = Rs. 62.50
**Conclusion:**
- **GST is applicable on the amount received for transportation services under RCM.**
- **GST should be calculated based on the total amount payable as per the invoices.**
For precise calculations and compliance, consulting a GST expert or tax advisor is recommended to ensure accurate GST treatment and reporting.
### **1. GST Treatment of Transportation Charges Under RCM**
**a. **Reverse Charge Mechanism (RCM):**
- **Applicable GST:** Under GST, the Reverse Charge Mechanism (RCM) is applicable to certain services where the recipient is liable to pay the tax instead of the supplier. For transportation services, RCM is applicable under the following conditions:
- The service is provided by a Goods Transport Agency (GTA).
- The recipient of the service is a registered person.
**b. **Transportation Charges and GST:**
- **Builty Amount (Rs. 550):**
- This amount is the base amount for the transportation service provided by the GTA. Under RCM, the GST is calculated on this amount.
- **Additional Charges (Rs. 625):**
- The additional charges included in the memo are the delivery charge and service charge. If these charges are also for the transportation service, they are part of the taxable value. The total amount (Rs. 625) reflects the total charge for the transportation service.
### **2. GST Calculation and Reporting**
**a. **GST on Builty Amount:**
- **Base Amount (Rs. 550):**
- Since GST under RCM applies to the transportation service provided by a GTA, GST should be paid on this amount.
- **GST Rate:**
- Typically, the GST rate on transportation services provided by a GTA is 5% (2.5% CGST + 2.5% SGST) or 12% (6% CGST + 6% SGST) if the service involves inter-state transportation. The rate should be confirmed based on the specific service and location.
**b. **GST on Additional Charges:**
- **If Charges Include GST:**
- If the additional charges (Rs. 625) include GST on the transportation services, then you need to determine if this total amount includes GST or if GST is separately mentioned.
- **If Separate Charges:**
- If GST is not separately mentioned and the total charge is inclusive, you should calculate GST based on the total amount paid.
### **3. Treatment of Multiple Bills**
**a. **Receiving Multiple Bills:**
- **Multiple Invoices (Rs. 625 Each):**
- If you receive multiple invoices (e.g., two invoices of Rs. 625 each), each invoice should be treated separately. You need to apply GST to each invoice based on the total amount.
### **4. Summary of GST Treatment**
**a. **Single Invoice of Rs. 625:**
- **GST on Total Amount:**
- If the invoice of Rs. 625 is inclusive of GST, then the amount should be taken as the total value including GST. You need to calculate the GST component and adjust it according to the total value.
**b. **Two Invoices of Rs. 625 Each:**
- **Total Value and GST:**
- If you receive two separate invoices of Rs. 625 each, then you should calculate GST separately for each invoice based on the applicable GST rate. The total value for GST calculation will be Rs. 625 + Rs. 625 = Rs. 1250.
### **Practical Steps:**
1. **Determine GST Rate:**
- Check whether the amount includes GST or if GST is separately mentioned.
2. **Calculate GST:**
- If the amounts are inclusive of GST, back-calculate the GST based on the rate applicable (e.g., 5% or 12% for GTA services).
3. **Report and Pay GST:**
- Report the GST liability in GSTR-3B under the RCM section and pay the applicable GST.
4. **Maintain Documentation:**
- Keep records of all invoices, including the detailed breakdown of charges and GST.
### **Example Calculation:**
**If the amount of Rs. 625 includes GST (say at 5%):**
- **Amount before GST:**
- Rs. 625 / 1.05 = Rs. 595.24 (approx.)
- **GST Component:**
- Rs. 625 - Rs. 595.24 = Rs. 29.76 (approx.)
**If you receive two invoices:**
- **Total Amount:**
- Rs. 625 + Rs. 625 = Rs. 1250
- **GST Calculation:**
- Total GST on Rs. 1250 at 5% = Rs. 1250 * 5% = Rs. 62.50
**Conclusion:**
- **GST is applicable on the amount received for transportation services under RCM.**
- **GST should be calculated based on the total amount payable as per the invoices.**
For precise calculations and compliance, consulting a GST expert or tax advisor is recommended to ensure accurate GST treatment and reporting.
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