Transport business

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RAMAKRISHNA (Querist)
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27 September 2020 my friend has transport agency , he registered in gst , he has no own vehicles but he is hiring vehicles for transportation and getting commission on each trip , He is raising transport bill on total amount to customer on rcm basis , he is filling gstr-1 and gstr -3b , he has done approx 50 lakhs worth bills raised in fy 19-20 As per gst turn over is 50 Lakhs but he has got commission on each trip minimum 200/- . How can he show the turn over in income tax , as per gst turnover 50 lakhs but he has arrived income nearly 2 lakhs( commission) on total year because he has hired the vehicles from others.
Please give your valuable suggestion on , how can he show the income as per gst turnover or commission basis , customers transferred the total bill amount in his bank account sir .

CA Kushwanth AVSR

CA Kushwanth AVSR (Expert)
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29 September 2020 Is he raising the bill on his own name or on the name of the original owner of the vehicle.?

Aashok Kumar Sharma

Aashok Kumar Sharma

(Expert)
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02 August 2025 Great question! Here's how your friend should approach this from **Income Tax** and **GST** perspectives:

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### 1. **GST Perspective:**

* Since your friend is a transport agency **without owning vehicles**, and only **earning commission on hired vehicles**, he is essentially providing **service of arranging transport**.
* He **raises GST invoices on the total amount charged to the customer**, but under **Reverse Charge Mechanism (RCM)**.
* The **GST turnover** is **total amount billed to customers** (around ₹50 lakhs).
* He **discharges GST liability on commission received or the entire value under RCM**, depending on whether he is registered as an agent or principal (usually commission).

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### 2. **Income Tax Perspective:**

* For **Income Tax**, your friend should declare income on a **net basis**, i.e., the **commission earned**.
* The **₹50 lakhs turnover figure is the gross billing amount (total freight)** — but since vehicles are hired, he is **not earning that full amount**; he only **earns commission (say ₹2 lakhs)**.
* Therefore, **income should be declared as commission income** (₹2 lakhs) and the **expenses** (payments to vehicle owners) should also be recorded.
* His **gross receipts** for Income Tax will be commission, not the total freight amount.

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### 3. **Bank Statement vs Income:**

* Even though customers transfer the entire amount (₹50 lakhs) to his account, for **accounting and tax**, he should treat the ₹50 lakhs as **“passing through” money**, like agency money collected on behalf of principals (vehicle owners).
* Only the **commission amount is income** for him.

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### **Summary:**

| Aspect | GST | Income Tax |
| ------------- | ---------------------------------- | -------------------------------------------------- |
| Turnover | ₹50 lakhs (gross freight amount) | ₹2 lakhs (commission income) |
| Taxable Value | Full value or commission (depends) | Commission only |
| Bank Receipts | ₹50 lakhs (full collection) | Treated as agency money, only commission is income |

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### Suggestion:

* Your friend should keep **proper books of account** to clearly show commission income and payments made to vehicle owners.
* File **GST returns with gross turnover (₹50 lakhs)** and pay GST on commission or as per applicable rules.
* File **Income Tax return showing commission income**.

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If you want, I can help draft a sample accounting entry or explain GST invoicing under RCM for such cases. Would that help?

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