Rate of GST on Recovery of freight from customer, after paying to transporter on behalf of customer

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This discussion clarifies the GST rate applicable when a seller recovers freight charges paid to a transporter on behalf of a customer. If the seller acts as a 'pure agent' and only recovers the exact amount paid (with no markup), no additional GST is charged on the debit note. The initial 5% GST paid by the buyer under RCM covers the transportation service.

Manoj Chauhan

Manoj Chauhan (Querist)

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.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

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.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

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.

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