gst by consumer

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Sushil khemka (Querist)
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30 June 2017 If a consumer purchase cement from factory gst paid goods and freight paid by that consumer n he is unragistered. In this case gst on freight is applicable or not ? And if yes who is liable to pay.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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30 June 2017 In this case gst on freight is not payable under RCM. GTA is liable to pay GST on freight and claim it along with freight.

Sushil khemka

Sushil khemka (Querist)
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30 June 2017 sir.U mean to say seller is not responsible for gst of freight

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Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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26 July 2024 In the scenario where an unregistered consumer purchases cement from a factory and pays for both the cement and the freight, here's how GST applies:

### GST on Freight for Unregistered Consumers

1. **Goods and Freight**:
- **GST on Goods**: The GST on cement purchased from the factory would be charged by the manufacturer, and it typically includes the cost of goods.
- **GST on Freight**: GST on freight depends on the nature of the freight and who is providing the transportation service.

2. **Applicability of GST on Freight**:
- **Freight Charges**: If the consumer is paying for freight, GST may apply to the freight charges as well. The applicability of GST on freight depends on whether the transportation service is covered under GST.

3. **Who is Liable to Pay GST on Freight**:
- **Freight Service Provider**: If the transportation service is provided by a registered transporter or logistics company, they are responsible for charging GST on the freight charges. The consumer, being unregistered, would need to pay this GST directly to the transporter.
- **Reverse Charge Mechanism (RCM)**: In some cases, GST on freight may be payable under the Reverse Charge Mechanism (RCM). This means that the recipient of the service (in this case, the consumer) is liable to pay the GST on freight directly to the government. This typically applies if the transporter is unregistered or if specific conditions under GST law apply.

4. **Key Points**:
- **Registered Transporter**: If the transporter is registered, they should issue an invoice with GST on the freight charges, and the consumer would pay this GST as part of the total freight cost.
- **Unregistered Transporter**: If the transporter is unregistered, the consumer might need to pay GST under RCM if applicable. The consumer should check the GST rules related to RCM and ensure compliance.

### Steps for the Consumer

1. **Check GST on Freight**:
- **Invoice from Transporter**: Review the invoice from the transporter to see if GST is charged. If the transporter is registered, GST should be included.
- **RCM Applicability**: Determine if RCM applies. If so, calculate the GST on freight and pay it directly to the government.

2. **Documentation**:
- **Keep Records**: Maintain records of both the cement purchase and freight charges, including any invoices and GST paid.

3. **Consult GST Professional**:
- **Seek Advice**: Consult a tax professional to understand your obligations regarding GST on freight, especially if RCM is applicable.

### Summary

- **GST on Freight**: GST on freight may be applicable depending on the transporter's registration status and the nature of the transportation service.
- **Liability to Pay**: Typically, the registered transporter charges GST on freight. If the transporter is unregistered, the consumer might need to pay GST under RCM if applicable.
- **Action Steps**: Review invoices, understand RCM applicability, and consult a GST professional for guidance.

By understanding these aspects, you can ensure compliance with GST regulations related to freight charges and manage your tax obligations effectively.