Issue of diesel to sub-contractors

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This discussion clarifies the tax implications when supplying diesel to subcontractors, with recovery from the vendor. It confirms that diesel supply is exempt from GST, meaning you can issue it without charging GST. However, if registered under VAT, you must charge VAT on diesel. If you are below the VAT registration threshold, you are not required to charge VAT.

NP123

NP123 (Querist)
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22 June 2021 If we issue diesel to sub-contractors, the amount of which will be recovered from vendor including GST against bills submitted by him. Below are the questions:
1) Can I raise debit note for the same to vendor
2) Would GST be applicable on that debit note? If yes, at what percentage
3) Can vendor claim ITC on the basis of debit note?
4) Is GST mandatory on issue of diesel, can I issue diesel without charging GST?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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23 June 2021 Diesel supply is exempt from GST. You can issue diesel without charging GST.

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NP123

NP123 (Querist)
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23 June 2021 Even of I issue diesel without GST, I will have to compulsorily charge VAT on diesel issued correct?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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23 June 2021 Yes, you have to charge VAT if you are registered under VAT.

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NP123

NP123 (Querist)
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23 June 2021 Thank you for your valuable opinion

What if I am not registered under VAT? In such case, is there any chance of challenges from government authorities if I issue diesel without charging VAT and GST?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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23 June 2021 If you are within the threshold for VAT registration no need to charge VAT.

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