Freight charge in invoice as per gst

Same issue is with me also. This question must be answered

I have been interacting with various people in the field. The feedback that has been received on our doubt is as follows:

a) More or less, charge the freight amount in the invoice.

b) Collect GST on the same as per the rate of article invoiced.

You are now good to go. Hope it helps. I have started to a/c accordingly.

Y

I appreciate the revert in this matter, Yes I have done the same for time being. Since input credit is involved  i wanted to know the correct format to avoid any issue in future. 

Further, if i evaluate from the customers point of view, he will end up paying 13% more tax on the freight amount if the freight is paid by the supplier. Because if he buys on to pay basis the transporter will charge him only 5%. Whereas now i will charge him 18% since the goods that i sell come under 18% tax rate. So, i feel its illogical but logic has no value in some rules and acts sometimes.

I am just looking after a clause in GST act that clarifies this clearly. Further, How to link the output and input tax to avail input tax credit is a big confusion now. 

 

As per my Knwoledge & Disscuss with Excise deptt

In case of Trnasportation

1-  If Transportation Charge me say Rs.1000. In this case i have to pay IGST(5%)  in Reverse Charge basis & i will get credit of this amount.

2-  in Invoice i will charge only Rs.1000 Without GST Charges.

3- You have to Charge Freight Seprately In Invoice but without GST.

4- If you include Freight Chrges in your product value than only GST will b applicable on your freight also.

Thanks for sharing the knowledge. However, if you think deep the logic still not right

Now let us consider the logic of GST or Taxation on goods or service. The concept is the transaction value should be Taxed whenever there is Movement of goods or Service provided by one entity to other (except for goods and services that are exempted from tax).

Let us consider your example, i.e. you want to send goods from Mumbai to Delhi.

1. The transporter charges you 1000 and mentions  2.5% CGST and 2.5% SGST to be padi on freight amount as per Reverse Charge Mechanism (it will never be IGST as the both the transporter and supplier belong to same place)

2. Now i raise an invoice and i just put freight charges as 1000 and dont apply any tax on it.

3. So now, if i get the credit of 5% GST i.e.  (2.5% CGST and 2.5% SGST ) that I paid VIA  Reverse Charge mechanism IT eventually means that the net tax paid on the freight in these transaction is Zero. Then what is the point of taking tax as per reverse charge mechanism or even charging tax. 

4. we have to be very careful with documents as input credit is involved. If any problem in documentaitons like invoice or linking each expense with the invoices then the input credit will be delayed.

I am still seeking clear concrete answers for these queries based on any clause in the act so that we can do business without any future risks.

Your answer to question 1

Yes freight will be seperatly shown in the invoice

Rate on the freight charges will be the GST rate of supplies you a making under GST invoice. you will be more clear by reading the value of supply on this link (https://www.knowyourgst.com/article/how-to-calculate-the-taxable-value-on-tax-invoice-under-gst-12/)

Ifyou add the profit element in the value of freight then you will become a intermediary between the transporter and resipiant of goods for which the profit element added to the freight will be called as comission which is a seperate service on which GST shall be charged

If you provide Freight amount in the invoice then there is no need to add tax component in such freight amount as you will get full credit of such tax paid.( do not apply logic becaue purpose of introduction of reverse charge mechenism is only the identification of the entities which are aviling the services of GTA just like the concept of TDS)

Your answer to question no 2

Full credit of taxpaid(2.5+2.5) will be available to the recipiant of service under reverse charge if such service is used for business purpose

1.Guys i want to know that TDS rate is as same as earlier or there is change in TDS rate under different section 194i,194j19c etc....please i am confused ?

2. Want to know that if we are importing some goods fom china and selling it at intra or interstate bases then how we can book purchase in our system as IGST component is there, recently wehave received shipment from china via DHL they raised an invoice to us by mentioned IGST on DHL Invoice, so can we take IGST credit from DHL or supplier hwo can we evaluate it in our systems.

Kindly give solution @ mention mail id accounts @ shinecyberspace.com

Thanks for your reply ...................

Hi,

Transporter gets GST tax amount.so what should he do for it? can he also get refund? and ge gets the refund then how can u also get the refund for the same.I guess u can get ITC for it and you should charge it from ur customer and he is liable to pay as he is the last receiver of the service

Mr rahul ... U got everything right from what has been explained here by Rahul Agrawal. Except that... When u r charging freight in the invoice.. u have to add it on as is basis.. and not add gst on the freight component as it will not be considered as value of supply.

So your concern of "refund by ur client" and other issues raised by u in your last paragraph, is resolved.

Hope this clarifies.