Gst on freight charges ?
This query is : Resolved
25 September 2017
While raising invoice, Should i Calculate GST for the freight charges paid to non GTA (individual transporter - who does not issue any consignment note ).
25 September 2017
Yes you will charge GST. Tax rate will be whatever is tax rate of your goods
25 September 2017
Thanks for your reply. But according to the following link, it says freight charges paid to non GTA is exempt from GST. https://taxguru.in/goods-and-service-tax/gst-transport-goods-road-service-gta.html/
Please clarify in this regard. i'm still confused.
Awaiting your reply
Please clarify in this regard. i'm still confused.
Awaiting your reply
27 July 2024
When dealing with freight charges under GST, the applicability and procedure can vary depending on whether the transporter is a Goods Transport Agency (GTA) or not. Here’s a detailed overview of how to handle GST on freight charges, particularly when dealing with individual transporters who do not issue a consignment note:
### 1. **Freight Charges Paid to Goods Transport Agency (GTA)**
**Applicability of GST:**
- **GTA Services:** If the freight charges are paid to a Goods Transport Agency (GTA), GST is applicable under the reverse charge mechanism (RCM). In this case, the recipient of the transportation service is liable to pay GST, and the GTA does not charge GST on the invoice.
**RCM Details:**
- **Rate:** The applicable GST rate on GTA services is **5%** (with no ITC on transportation of goods) or **12%** (with ITC on transportation of goods), depending on the nature of the goods and the services provided.
- **Reference:** Section 9(3) of the CGST Act, 2017, and relevant GST notifications detail the applicability of RCM for GTA services.
### 2. **Freight Charges Paid to Non-GTA (Individual Transporter)**
**Applicability of GST:**
- **Non-GTA Transporters:** For freight charges paid to an individual transporter or any transporter who is not a GTA and does not issue a consignment note, the situation is different. In this case, GST is not applicable under RCM, as RCM specifically applies to GTA services.
**Handling GST:**
- **No GST on Invoice:** If the transporter is not a GTA and does not issue a consignment note, you generally do not need to charge GST on the freight charges. The transporter should not include GST in their invoice.
- **Documentation:** Ensure that you have a proper transport invoice or receipt from the transporter for your records.
### 3. **Accounting and Documentation**
**For Non-GTA Transporters:**
- **Invoice:** The transporter’s invoice will not include GST. You will record the freight charges as an expense in your books of accounts without any GST component.
- **Accounting Entries:**
- **Debit**: Freight Charges Expense (Amount excluding GST)
- **Credit**: Bank/Cash (Total amount paid)
**Example:**
- **Freight Charges:** ₹10,000 (paid to non-GTA transporter)
- **GST:** Not applicable
- **Total Payment:** ₹10,000
**For GTA Services (If Applicable):**
- **Invoice:** If you are dealing with a GTA, they may issue an invoice without GST, and you will need to pay GST under RCM.
- **Accounting Entries:**
- **Debit**: Freight Charges Expense (Amount excluding GST)
- **Debit**: GST Output Liability (Amount of GST paid under RCM)
- **Credit**: Bank/Cash (Total amount paid)
### 4. **Summary**
1. **GTA Transporters:** GST is applicable under RCM, and the recipient pays the tax. The rate can be 5% or 12%, depending on the service and goods.
2. **Non-GTA Transporters:** GST is generally not applicable. The transporter’s invoice should not include GST, and you should account for the freight charges without adding GST.
**Consultation:** For specific cases or complex scenarios, especially with changing GST rules, consulting with a GST professional or tax advisor is recommended to ensure compliance and proper handling of GST obligations.
### 1. **Freight Charges Paid to Goods Transport Agency (GTA)**
**Applicability of GST:**
- **GTA Services:** If the freight charges are paid to a Goods Transport Agency (GTA), GST is applicable under the reverse charge mechanism (RCM). In this case, the recipient of the transportation service is liable to pay GST, and the GTA does not charge GST on the invoice.
**RCM Details:**
- **Rate:** The applicable GST rate on GTA services is **5%** (with no ITC on transportation of goods) or **12%** (with ITC on transportation of goods), depending on the nature of the goods and the services provided.
- **Reference:** Section 9(3) of the CGST Act, 2017, and relevant GST notifications detail the applicability of RCM for GTA services.
### 2. **Freight Charges Paid to Non-GTA (Individual Transporter)**
**Applicability of GST:**
- **Non-GTA Transporters:** For freight charges paid to an individual transporter or any transporter who is not a GTA and does not issue a consignment note, the situation is different. In this case, GST is not applicable under RCM, as RCM specifically applies to GTA services.
**Handling GST:**
- **No GST on Invoice:** If the transporter is not a GTA and does not issue a consignment note, you generally do not need to charge GST on the freight charges. The transporter should not include GST in their invoice.
- **Documentation:** Ensure that you have a proper transport invoice or receipt from the transporter for your records.
### 3. **Accounting and Documentation**
**For Non-GTA Transporters:**
- **Invoice:** The transporter’s invoice will not include GST. You will record the freight charges as an expense in your books of accounts without any GST component.
- **Accounting Entries:**
- **Debit**: Freight Charges Expense (Amount excluding GST)
- **Credit**: Bank/Cash (Total amount paid)
**Example:**
- **Freight Charges:** ₹10,000 (paid to non-GTA transporter)
- **GST:** Not applicable
- **Total Payment:** ₹10,000
**For GTA Services (If Applicable):**
- **Invoice:** If you are dealing with a GTA, they may issue an invoice without GST, and you will need to pay GST under RCM.
- **Accounting Entries:**
- **Debit**: Freight Charges Expense (Amount excluding GST)
- **Debit**: GST Output Liability (Amount of GST paid under RCM)
- **Credit**: Bank/Cash (Total amount paid)
### 4. **Summary**
1. **GTA Transporters:** GST is applicable under RCM, and the recipient pays the tax. The rate can be 5% or 12%, depending on the service and goods.
2. **Non-GTA Transporters:** GST is generally not applicable. The transporter’s invoice should not include GST, and you should account for the freight charges without adding GST.
**Consultation:** For specific cases or complex scenarios, especially with changing GST rules, consulting with a GST professional or tax advisor is recommended to ensure compliance and proper handling of GST obligations.
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