GST RCM on Freight Charges for Exempted Goods

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This discussion clarifies the Goods and Services Tax (GST) Reverse Charge Mechanism (RCM) on freight charges when purchasing exempted goods. In cases where the seller includes freight on their invoice for exempted goods, the buyer generally has no RCM liability. However, if a separate logistics company invoices the buyer for freight, RCM may apply. It's crucial to check if the specific exempted goods or the transportation service itself falls under exemption notifications like Notification No. 12/2017-Central Tax (Rate).

SIDDHARTH MAHESHKUMAR SHAH

SIDDHARTH MAHESHKUMAR SHAH (Querist)

18 February 2025 Index:
ABC Company Private Limited – Registered Entity (Purchaser)
DEF Company Private Limited – Vendor Supplying Exempted Goods (Seller)
XYZ Logistics – Transportation Company

Case: 1
ABC purchase Exempted Goods from DEF.
DEF issue the invoice to ABC for Exempted Goods (Goods Cost 1,00,000) and Freight Charges (10,000) thereon. (Total Invoice Value 1,10,000)

Question: Is there any liability of ABC to charged RCM GST on freight charges for the invoice issued by DEF (10,000).

Case: 2
ABC purchase Exempted Goods from DEF.
DEF issue the invoice to ABC for Exempted Goods (Goods Cost 1,00,000)
XYZ issue the Invoice to ABC for Freight Charges (10,000) for transporting the goods from DEF to ABC.

Question: Is there any liability of ABC to charged RCM GST on freight charges for the invoice issued by XYZ (10,000).

ASHWANI DHANUKA

ASHWANI DHANUKA (Expert)

18 February 2025 in scenario 1- there will not be any RCM liability as he has not availed any services from a GTA.
in scenario 2- There will be RCM liability. But since you have mentioned that product is exempted, please check that if product is covered under exemption Notification No. 12/2017- Central Tax (Rate) 28.06.2017 which prescribes transportation of certain goods as exempted.

SIDDHARTH MAHESHKUMAR SHAH

SIDDHARTH MAHESHKUMAR SHAH (Querist)

20 February 2025 Please provide the list of product covered under exemption Notification No. 12/2017- Central Tax (Rate) 28.06.2017

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