Gst on transportation charges (freight)

This query is : Resolved

Rachana Gokhale (Querist)
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12 July 2017 Dear Sir / Madam,

We have shipped Material through a Big and Reputed Transporter and asked to give a LR with Freight and GST Amt mentioned in it. But they replied that they are not charging GST.

Now my Questions are -

1) Why are Trasporters not charging GST inspite of they being Registered under GST ?

2) Is GST chargeable on Transportation Charges or Not ? Is there any Exemption limit ?

3) If GST is chargeable, then at what rate ?

4) Who has to pay GST ? Transporter or We the Consignor ?

5) If We pay GST to Transporter then can we take it as ITC ?

Thanks & Regards,
Rachana

Anand

Anand (Expert)
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12 July 2017 on gta reverse charge mechanism apply.. and service receiver will pay gst on its own.. not to be paid to gta

Rachana Gokhale

Rachana Gokhale (Querist)
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13 July 2017 Thanks Sir !
Then why GTA s have also taken Registration under GST ? Do they get any ITC ?

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Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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27 July 2024 ### GST on Transportation Charges (Freight)

**1. Why are Transporters Not Charging GST Despite Being Registered?**

- **Non-GTA Transporters:** If a transporter is not registered as a Goods Transport Agency (GTA) but operates as a regular transporter, they may be following the GST rules that apply to their business model. Transporters who are not classified as GTAs may not be aware of the specific GST obligations related to freight.

- **Nature of Service:** The GST treatment may vary depending on whether the transporter is classified as a GTA or a regular transporter. Regular transporters may follow different rules compared to GTAs.

**2. Is GST Chargeable on Transportation Charges? Is There Any Exemption Limit?**

- **Taxable Transportation Services:** Transportation of goods by road is generally taxable under GST. Whether GST is applicable and at what rate depends on the classification of the transporter.

- **Exemption Limit:** For Goods Transport Agencies (GTA), there is a threshold exemption limit of ₹20 lakhs (₹10 lakhs for special category states) for the aggregate turnover. If the GTA's turnover is below this limit, they may not be required to charge GST.

**3. Rate of GST on Transportation Charges:**

- **For Goods Transport Agencies (GTA):** The GST rate is **5%** with no input tax credit (ITC) available. This rate is applicable under Notification No. 11/2017-Central Tax (Rate).

- **For Other Transporters (Not Classified as GTA):** Regular transporters might charge **18% GST** if they are providing services that do not fall under the GTA classification.

**4. Who Has to Pay GST?**

- **Goods Transport Agency (GTA):** If the service is provided by a GTA, the liability to pay GST is on the recipient of the service under the reverse charge mechanism (RCM). The recipient of the service, i.e., the consignor or the consignee, will be responsible for paying GST under RCM.

- **Regular Transporters:** For other transporters, GST is typically charged by the transporter and paid by the consignor (or the party booking the transportation) as part of the transportation invoice.

**5. Input Tax Credit (ITC):**

- **GTA Services:** For GTA services, the GST rate of **5%** is applicable, and ITC is not available on this rate. The consignor or consignee cannot claim ITC on the 5% GST charged by GTAs.

- **Regular Transporters:** For regular transporters charging **18% GST**, ITC can be claimed on the GST paid if the transportation service is used in the course of business.

**Additional Considerations:**

- **Registration:** Transporters who provide services falling under GTA might be required to obtain GST registration and follow specific compliance requirements.

- **ITC for Regular Transporters:** Regular transporters who charge 18% GST and are not classified as GTAs will follow regular GST compliance and ITC provisions.

### **Summary:**

1. **GST on Transportation Charges:** Generally applicable, but the rate and ITC depend on whether the transporter is a GTA or a regular transporter.
2. **GTA:** 5% GST with no ITC; the recipient pays GST under reverse charge.
3. **Regular Transporters:** 18% GST; ITC available.
4. **Exemption Limit:** ₹20 lakhs turnover threshold for GTAs.
5. **ITC:** Available for regular transporters but not for GTA services.

### **References:**

- **Notification No. 11/2017-Central Tax (Rate):** Specifies the GST rate for goods transport agencies.
- **GST Act:** General provisions on the place of supply and reverse charge mechanism.

Consult with a GST professional or tax advisor to ensure compliance and correct application of GST rules based on your specific situation and transporter classification.