Composite supply issue

168 views 2 replies

harsh

Business

105 Points Joined May 2017

We have taken marine inland road transit insurance policy (bulk) for our sales to clients at 18% gst

When we sell goods, we fill marine declaration form (provided by agent) and the total covered value is reduced as per invoice.

for Ex-

Goods (5% GST) @ Rs.2000/qtl X 100 qtl = Rs.2,00,000

Packing charges - Rs. 4,500

Insurance charges - Rs.500

What should be the total taxable value...??

2,00,000 or 2,04,500 or 2,05,000

And what should be the GST on whole Invoice 5% or 18%.?

What we were doing is charging 5% GST on 2,05,000 (as per Composite Scheme).

But now my Tax consultant is saying you can't sell insurance (you aren't registered agent).

And if charges then you should charge 5% on 2,04,500 and 18% on 500 to customer.

What is correct.

Replies (2)

Harsh ji,. your supply is composite supply. composite supply is supply of two or more goods or/and service at same price and such supply is in normal commercial practice. Tax rate is rate of principal elements .
in your case your supply is composite and rate of tax is rate of goods.

Value as per sec 15 is transaction value unless not related party or supply of goods or service for consideration other than cash .
you are also providing insurance service to your client .
such value will not add on transaction value if you are providing it as pure agent .

pure agent means supplying of goods or/and service to recipient procuring from third party.
also few condition need to be satisfied
1) you are providing such service or goods at request of your client.
2) your are just charging actual amount incurred by you on bill and no tax on that price .

in my best of opinion you are not not fulfilling above requirement then you need to pay tax on 205000 @ 5%.
and you can take credit of insurance amount if bill is issued your name.

I think that will do your purpose.
Thanking you

harsh

Business

105 Points Joined May 2017

Thanks sudip ji for you reply. I would like to add more points. 1.we are a manufacturing unit 2. We buy bulk policy and not individual shipment policy. ( Like we pay 10k for sum insured 1cr goods value). It then keep reducing. 3. manufactured goods price fluctuate a lot. 4. We insist our customers to take Transit Insurance and they are ok with it. (Mostly long distance customers) 5. Our customers are also manufacturing units