Is Frieght paid on outward supplies liable to tax

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This discussion clarifies whether freight charges on outward supplies are subject to tax. If transportation is included with the sale of goods and charged to the recipient, it's considered a composite supply and taxed at the same rate as the goods. However, if the seller bears the freight cost without separate charges to the buyer, GST audit authorities may still require tax payment on this expenditure, potentially under Reverse Charge Mechanism (RCM).

Venkateshwarlu Pulluri

Venkateshwarlu Pulluri (Querist)

15 February 2023 Dear sir/s, Is Freight paid on outward supplies liable to tax, if sent by engaging a goods vehicle directly to recipients

CA Altamush Zafar

CA Altamush Zafar (Expert)

15 February 2023 Transportation charged to recipients along with sale of goods will be considered as composite supply and such transportation charges will be taxable at the same rates as that of goods

Venkateshwarlu Pulluri

Venkateshwarlu Pulluri (Querist)

16 February 2023 Sir, in this case transportation not charged separately, but seller at his scope delivered the goods, not collected or claimed on the buyer, where as GST audit authority asking to pay tax on expenditure as per profit & loss statement is it correct

CA Altamush Zafar

CA Altamush Zafar (Expert)

16 February 2023 Yes then if it is freight expenses borne by you whether in sale or purchase you will have to pay RCM

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