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Should GST be charged on freight charged in a tax invoice

04 July 2017

Whether GST should be charged on freight or transportation cost charged in a tax invoice?

If GST is to be charged then at what rate?

Is RCM applicable on transport part of invoice?

whether SAC to be mentioned in the invoice?

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48 Replies

Rajat Khanna (86 Points)
Replied 04 July 2017

GST for GTA is 5% with no ITC

suman karmakar (none) (72 Points)
Replied 04 July 2017

yes. the GST should be charged on freight or transportation cost charged in a tax invoice.

CA Rashmi Gandhi (Chartered Accountant) (86220 Points)
Replied 04 July 2017

Any section or clarification Suman Karmakar

1 Like

SANJAY GOEL (70 Points)
Replied 04 July 2017

If you paid GST on freight under RCM then you can claim ITC

suman karmakar (none) (72 Points)
Replied 04 July 2017

please refer section 15(value of taxable supply)

1 Like

CA Rashmi Gandhi (Chartered Accountant) (86220 Points)
Replied 04 July 2017

Nothing is given in Sec 15

PRABIR PAUL (*****Accountant***** Never insult to any person for any kind of lack of knowledge or misread.) (1443 Points)
Replied 04 July 2017

This question is generate very common cofusion. Can anyone give proper answer on this topic?

Bijely Kochupurackal (9 Points)
Replied 04 July 2017

could anyone clarify this matter

Karan kapoor (Professional) (88 Points)
Replied 04 July 2017

If transportation cost is part and of supply then GST has to be charged at the same rate of tax charged on supply. Suppose, If you are supplying goods and charged taxed at 5%, then you have to charge tax on transport cost also at 5%. It should be noticed that if you are not charging freight cost in invoice and is directly paid by buyer or recipient of supply, then he has to comply with GTA provisions including RCM

Rajat Khanna (86 Points)
Replied 04 July 2017

but what about ITC of GTA by way of RCM. I guess its not available.

Bhavleen Kaur Oberoi (Chartered Accountant) (228 Points)
Replied 04 July 2017

Yes the above answer by Mr. Karan Kapoor is correct. If you charge freight along with the goods supplied by you in the tax invoice then it becomes a composite supply and then the GST will be charged on the amount including the price of goods supplied , insurance, packing and freight and the rate of tax on this amount will be the rate of tax applicable on principal supply of goods i.e. for example if goods supplied is a road safety product then , the tax rate will be 18% on the said sum( including freight) and not 5% which is applicable for freight. ANd Input tax credit of Freight is not available as per the Schedule of GST Rates on Services.

SUDEEP JAIN (6 Points)
Replied 04 July 2017

sir , if freight is paid by the supplier then it will be added to the value of goods( as it is considered to be part of your sale in GST) and then GST will be charged , if the transporter is also registered under GST then no need to pay 5% under RCM , if transporter is not registered then 5% is payable under RCM . If freight is to be paid by your buyer then no need to add it in your goods value , but 5% will be paid on freight amount as RCM . you can claim ITC of RCM only if you deposit it in cash .

Jitender Singh Patyal (INCOME TAX EXPERT) (56 Points)
Replied 04 July 2017

Goods are transported by using three means of transportation:-

1. By Air

2. By Water

3. By Road

Rail
GTA
Other modes

1. Transport of goods by Air

S. No.	Particulars	Whether taxable or not under GST?	Tax rate
1.	Within India	Yes	18%
2.	From India to outside India	Yes	18%
3.	From outside India to India	Exempt Service	Exempt Service

2. Transport of goods by water

S. No.	Particulars	Whether taxable or not under GST?	Tax rate
1.	Within India (inland waterways).	Exempt Service	Exempt Service
2.	From India to outside India.	Yes	18%
3.	From outside India to India	Exempt service. Conditions:- 1. Service provided by a person located in non taxable territory. 2. Services provided to a person located outside the taxable territory. 3. Transportation of goods is done in a vessel.	Exempt service. Conditions:- 1. Service provided by a person located in non taxable territory. 2. Services provided to a person located outside the taxable territory. 3. Transportation of goods is done in a vessel.

3. Transport of goods by Road

S. No.	Particulars	Whether taxable or not under GST?	Tax rate
1.	By rail other than container.	Taxable	5% with ITC on input service.
2.	By rail in container	Yes	12% with ITC on input service.
3.	By Goods Transport Agency	Yes	5% with NO ITC.
4.	Services of goods by courier agency	Yes	18% with ITC credit.
5.	Other than Rail, GTA and courier agency.	Exempt Service	Exempt Service

Bhavleen Kaur Oberoi (Chartered Accountant) (228 Points)
Replied 04 July 2017

Originally posted by : SUDEEP JAIN
	sir , if freight is paid by the supplier then it will be added to the value of goods( as it is considered to be part of your sale in GST) and then GST will be charged , if the transporter is also registered under GST then no need to pay 5% under RCM , if transporter is not registered then 5% is payable under RCM . If freight is to be paid by your buyer then no need to add it in your goods value , but 5% will be paid on freight amount as RCM . you can claim ITC of RCM only if you deposit it in cash .

Your statement is correct but it is not the relevant answer to question of Mr. Bijely , the person who asked this question. ANd Reverse charge liability is always paid in cash/cheque/or any other means of payment in cashor electronic money.