Rate of GST on Recovery of freight from customer, after paying to transporter on behalf of customer
This query is : Resolved
11 October 2025
Dear Sir/Madam,
If the seller pays to the transporter (on behalf of the buyer), separately, with 5% GST on RCM basis and then raises a debit note on the buyer, how much GST will be application on such recovery? (5% or 18%).
Thanks.
If the seller pays to the transporter (on behalf of the buyer), separately, with 5% GST on RCM basis and then raises a debit note on the buyer, how much GST will be application on such recovery? (5% or 18%).
Thanks.
11 October 2025
The seller pays the transporter and 5% GST under RCM on behalf of the buyer.
The seller then issues a debit note to recover the payment from the buyer.
As per GST law, since the GST on the expense (transportation) has already been paid via RCM, treating the recovery as a reimbursement does not attract further GST provided the seller acts as a "pure agent" for the buyer in this transaction.
If the debit note covers only the amount paid, with no markup, the recovery is not a taxable supply and no further GST is applicable.
The seller then issues a debit note to recover the payment from the buyer.
As per GST law, since the GST on the expense (transportation) has already been paid via RCM, treating the recovery as a reimbursement does not attract further GST provided the seller acts as a "pure agent" for the buyer in this transaction.
If the debit note covers only the amount paid, with no markup, the recovery is not a taxable supply and no further GST is applicable.
11 October 2025
5% GST under RCM is paid by the service recipient (buyer) through the seller.
No GST is levied on the subsequent recovery via debit note if it's a reimbursement by a "pure agent".
If the seller adds any markup or profit, that component would attract GST as it is no longer just a reimbursement.
In short, the recovery of transporter payment at 5% RCM by debit note from the buyer does not attract further GST, provided it is a pure reimbursement without markup.
No GST is levied on the subsequent recovery via debit note if it's a reimbursement by a "pure agent".
If the seller adds any markup or profit, that component would attract GST as it is no longer just a reimbursement.
In short, the recovery of transporter payment at 5% RCM by debit note from the buyer does not attract further GST, provided it is a pure reimbursement without markup.
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