VAT ON FREIGHT

If Freight is being collected as additional cost, even on actual basis , vat is payable on the said collection of freight.

If your case is relating to Assam, You are advised to go through section 2(44) of AVAT Act, 2003.As per the said sub-section, cost of freight or delivery is only out of the purview of Sales Price. Here it appears that the Company is trying to save VAT on Rs. 300/- (350-50). As the amount of Rs. 350/- is neither the cost of delivery nor the cost of freight, there is no reason that VAT should not be levied on this amount.

pl refer to the definition of sale price, freight and discount is excluded from the sale price . on freight you have to pay service tax as GTA

I would like to differ a little bit with Ld. Vijay K.A.For determining the tax liability, one have to consider the amount of taxable turnover. As per section 11 of Assam VAT Act, 2003, Taxable turnover is derived after making few eligible deductions from the Gross Turnover. As per section 2(23) Gross turnover is the aggregate of the amount of sales price...... ,. As per section 2(44), "sale price" means the amount of valuable consideration paid or payable to a dealer for any sale made including any sum charged for anything done by the dealer in respect of goods at the time of or before delivery of the goods other than the cost of freight or delivery or the cost of installation in cases where such cost is separately charged. Accordingly, cost of freight or delivery, if charged separately, is only out of the purview of VAT. In my opinion, freight charges will be excluded from the taxable sales only if following conditions are satisfied:- 01. Cost of freight is incurred in course of delivering or transportation of goods to the purchser or his agent after the sales. 02. Such cost is separately charged in the bill. 03. No profit elementis involved in such charges and such charges are exclusive against the actual cost incurred after sales.

I would request Mr. S Agarwal to specify the state under which this transaction is being done

Mr. Dayal I had a talk with S. Agarwal, the case is relating to Assam. The Company is charging Freight on a straight rate on all of its products from Super Distributors. I am trying to distinguish that any amount charged as freight can not be excluded from taxable value. Only the cost of freight is to be excluded. Here cost of freight will certainly mean cost of freight after sales. In other words, no body is allowed to evade VAT by charging some portion of sales price as freight. No profit on freight can be made, if the seller want to get benefit of tax exemption. Freight incurred in cousre of purchase also can not be recovered from purchaser as freight, being the same is part of the sale price.

One of my claint is charging VAT on FREIGHT IN THE SALE BILL . IS IT CURRECT? Can you pls explain with VAT section

No, freight will not be covered for charging VAT, as reffered in the define "sale price" under VAT Act 

Originally posted by :Sanjeev Kumar
"	No, freight will not be covered for charging VAT, as reffered in the define "sale price" under VAT Act	"

 

Hi,

One of my client is charging MVAT on freight amount which he is showing seperately (ie freight & packaging) in the same invoie. I have some confusion should we charge vat on Freight amount also? Also under which head we have to show freight & packaging I mean under sales a/c or direct incomes.

Santosh

Is the same rule applicable for TNVAT also?

 

 

PLS TELL ME ON WHICH BASIS VAT IS CALCULATED ON FREIGHT

Simple,if seller is charging the Freight in invoice then he has to charge VAT on full amount(incl freight) as apllicable rate of material.

But if Fright has been paid by buyer then seller need not to charge VAT on such freight.

I have just taken distribution of a company for North Bihar. I would like to clarify this:

" Company has given a price list & asked me to sell the product on the SP+Vat+Freight Incurred from Manufacturing Point(Karnal) to Muzaffarpur. How will VAT be charged?"

As quoted by S. Agarwala, I have seen the same practise by a Whirlpool Distributor at PATNA.