GST on Forwarding charges

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If you sell exempt goods to another state and charge forwarding fees, you likely need GST registration, regardless of your turnover, as per Section 24 of the CGST Act. This is because inter-state taxable supplies, including those with forwarding charges, are subject to registration. GST should be applied using the HSN code for forwarding charges, although a litigative view suggests it could be treated as a composite supply with the exempt goods, potentially making the forwarding charges exempt too.

CA Ritu Chauhan

CA Ritu Chauhan (Querist)

05 December 2020 If an entity is selling exempt goods to another state & charges forwarding charges then whether it would be liable to obtain GST registration as per Section 24 of CGST Act?

Lekhraj sood

Lekhraj sood (Expert)

05 December 2020 Section 24 states-A persons making any inter-State taxable supply of goods is required to be registered under GST irrespective of turnover limit.
Taxable supply includes exempt supply. Hence, he would be required to get registered under GST and pay GST on forwarding charges.

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CA Ritu Chauhan

CA Ritu Chauhan (Querist)

05 December 2020 Thank you so much sir for the solution. I have 1 more question that the entity charge GST on which HSN, i.e. on Forwarding charges HSN or on the goods HSN that it is supplying?

Lekhraj sood

Lekhraj sood (Expert)

06 December 2020 It will be on HSN of forwarding charges.
There can be another view, though litigative, that the supply can be treated as composite supply of exempted item and forwarding charges and no tax payable on forwarding charges accordignly.

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