Gst on transportation service

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

31 December 2017 A - Transport Vehicle Owner
B - GTA
C - C&F Agent
D - C&F Agent
E - Exporter

Transportation Charges billing is taking in following Sequence
A to B, B to C, C to D, D to E

Who is liable to pay GST and at what rate on Transaction between
1. B to C
2. C to D
3. D to E

CA Suresh Jain

CA Suresh Jain (Expert)
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31 December 2017 In terms of Notification no. 12/2017-Central Tax (Rate) dated 28.06.2017 (sr.no.18), the following services are exempt from GST
Services by way of transportation of goods (Heading 9965):
(a) by road except the services of:
(i) a goods transportation agency;
(ii) a courier agency;
(b) by inland waterways.
Thus, it is to be seen that mere transportation of goods by road, unless it is a service rendered by a goods transportation agency, is exempt from GST.

There is no need of C paying GST where GTA has charged 5% in his invoice

Querist : Anonymous

Querist : Anonymous (Querist)

01 January 2018 if GTA has not charged GST, then it is payable on reverse charge by C.

What is the liability when C raises invoice on D and when D raises invoice on E.
Whether it is exempt as per above notification or taxable on reverse charge or taxable on forward charge ?
And if taxable at forward charge then at what rate ?

.

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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27 July 2024 In the transportation of goods involving multiple parties and varying types of transporters, the GST applicability can be complex. Here’s a detailed breakdown of GST liability on each transaction in your scenario:

### 1. **Transaction B to C:**

- **Parties Involved:** GTA (B) providing service to C&F Agent (C).
- **GST Rate:**
- Generally, for Goods Transport Agency (GTA) services, the GST rate is **5%**.
- Under GST, GTA services are subject to **reverse charge mechanism (RCM)** when provided to a business entity. Therefore, **C (C&F Agent)**, being the recipient, is liable to pay GST under RCM.

**Action Required by C:**
- **Pay GST on Reverse Charge:** C needs to pay GST at **5%** under RCM and can claim Input Tax Credit (ITC) if applicable.

### 2. **Transaction C to D:**

- **Parties Involved:** C&F Agent (C) providing service to another C&F Agent (D).
- **GST Rate:**
- **C to D**: Since **C is not a GTA** and is providing a transportation service directly, **C should charge GST at the applicable rate**.
- The rate is **18%** for regular transportation services, **not under GTA**.

**Action Required by D:**
- **Forward Charge:** **D** will pay GST at **18%** for the service provided by **C** and will be eligible to claim ITC if applicable.

### 3. **Transaction D to E:**

- **Parties Involved:** C&F Agent (D) providing service to Exporter (E).
- **GST Rate:**
- **D to E:** If **D is a GTA**, and GTA services are provided to an Exporter, **the services are usually exempt** or subject to **zero-rated supply** for exports.
- If **D has not charged GST**, and if D is a GTA, then **E (Exporter)** needs to pay GST under RCM if applicable.

**Action Required by E:**
- **Reverse Charge (if applicable):** If **D** (GTA) has not charged GST, **E** needs to pay GST under reverse charge at **5%**. However, for export services, **E** may claim a refund or benefit from zero-rated supply provisions.

### **Liability and GST Treatment:**

1. **Transaction B to C (GTA to C&F Agent):**
- **Liability:** C (recipient) under **RCM**.
- **Rate:** **5%**.

2. **Transaction C to D (C&F Agent to C&F Agent):**
- **Liability:** C (supplier) charges GST.
- **Rate:** **18%**.

3. **Transaction D to E (C&F Agent to Exporter):**
- **Liability:**
- If D is a GTA and provides services to an exporter, this transaction is typically **zero-rated**. If GST is charged, the exporter can claim a refund.
- If D is not a GTA and charges GST, then **E** needs to pay GST under forward charge at **18%** and may claim ITC or a refund if it’s a zero-rated supply.

### **Summary of GST Rates and Liabilities:**

- **B to C:** Reverse Charge at **5%** by C.
- **C to D:** Forward Charge at **18%** by C.
- **D to E:**
- **If GTA:** Zero-rated or reverse charge at **5%**.
- **If Non-GTA:** Forward charge at **18%**.

### **Reference Notifications and Rules:**

- **Notification No. 11/2017-Central Tax (Rate)**: Provides details on rates and conditions for transportation services.
- **Notification No. 13/2017-Central Tax (Rate)**: Outlines the reverse charge mechanism applicable to GTA services.

### **Additional Notes:**

- Ensure that the specific nature of each service and the applicable GST notifications are consulted.
- Compliance with GST regulations is crucial to avoid penalties and ensure correct ITC claims.

Consult with a GST professional for detailed advice tailored to your specific business transactions and documentation.

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