Gst on transportation service

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

31 December 2017 A - Transport Vehicle Owner
B - GTA
C - C&F Agent
D - C&F Agent
E - Exporter

Transportation Charges billing is taking in following Sequence
A to B, B to C, C to D, D to E

Who is liable to pay GST and at what rate on Transaction between
1. B to C
2. C to D
3. D to E

CA Suresh Jain

CA Suresh Jain (Expert)
Follow

31 December 2017 In terms of Notification no. 12/2017-Central Tax (Rate) dated 28.06.2017 (sr.no.18), the following services are exempt from GST
Services by way of transportation of goods (Heading 9965):
(a) by road except the services of:
(i) a goods transportation agency;
(ii) a courier agency;
(b) by inland waterways.
Thus, it is to be seen that mere transportation of goods by road, unless it is a service rendered by a goods transportation agency, is exempt from GST.

There is no need of C paying GST where GTA has charged 5% in his invoice

Querist : Anonymous

Querist : Anonymous (Querist)

01 January 2018 if GTA has not charged GST, then it is payable on reverse charge by C.

What is the liability when C raises invoice on D and when D raises invoice on E.
Whether it is exempt as per above notification or taxable on reverse charge or taxable on forward charge ?
And if taxable at forward charge then at what rate ?

.

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
Follow

27 July 2024 In the transportation of goods involving multiple parties and varying types of transporters, the GST applicability can be complex. Here’s a detailed breakdown of GST liability on each transaction in your scenario:

### 1. **Transaction B to C:**

- **Parties Involved:** GTA (B) providing service to C&F Agent (C).
- **GST Rate:**
- Generally, for Goods Transport Agency (GTA) services, the GST rate is **5%**.
- Under GST, GTA services are subject to **reverse charge mechanism (RCM)** when provided to a business entity. Therefore, **C (C&F Agent)**, being the recipient, is liable to pay GST under RCM.

**Action Required by C:**
- **Pay GST on Reverse Charge:** C needs to pay GST at **5%** under RCM and can claim Input Tax Credit (ITC) if applicable.

### 2. **Transaction C to D:**

- **Parties Involved:** C&F Agent (C) providing service to another C&F Agent (D).
- **GST Rate:**
- **C to D**: Since **C is not a GTA** and is providing a transportation service directly, **C should charge GST at the applicable rate**.
- The rate is **18%** for regular transportation services, **not under GTA**.

**Action Required by D:**
- **Forward Charge:** **D** will pay GST at **18%** for the service provided by **C** and will be eligible to claim ITC if applicable.

### 3. **Transaction D to E:**

- **Parties Involved:** C&F Agent (D) providing service to Exporter (E).
- **GST Rate:**
- **D to E:** If **D is a GTA**, and GTA services are provided to an Exporter, **the services are usually exempt** or subject to **zero-rated supply** for exports.
- If **D has not charged GST**, and if D is a GTA, then **E (Exporter)** needs to pay GST under RCM if applicable.

**Action Required by E:**
- **Reverse Charge (if applicable):** If **D** (GTA) has not charged GST, **E** needs to pay GST under reverse charge at **5%**. However, for export services, **E** may claim a refund or benefit from zero-rated supply provisions.

### **Liability and GST Treatment:**

1. **Transaction B to C (GTA to C&F Agent):**
- **Liability:** C (recipient) under **RCM**.
- **Rate:** **5%**.

2. **Transaction C to D (C&F Agent to C&F Agent):**
- **Liability:** C (supplier) charges GST.
- **Rate:** **18%**.

3. **Transaction D to E (C&F Agent to Exporter):**
- **Liability:**
- If D is a GTA and provides services to an exporter, this transaction is typically **zero-rated**. If GST is charged, the exporter can claim a refund.
- If D is not a GTA and charges GST, then **E** needs to pay GST under forward charge at **18%** and may claim ITC or a refund if it’s a zero-rated supply.

### **Summary of GST Rates and Liabilities:**

- **B to C:** Reverse Charge at **5%** by C.
- **C to D:** Forward Charge at **18%** by C.
- **D to E:**
- **If GTA:** Zero-rated or reverse charge at **5%**.
- **If Non-GTA:** Forward charge at **18%**.

### **Reference Notifications and Rules:**

- **Notification No. 11/2017-Central Tax (Rate)**: Provides details on rates and conditions for transportation services.
- **Notification No. 13/2017-Central Tax (Rate)**: Outlines the reverse charge mechanism applicable to GTA services.

### **Additional Notes:**

- Ensure that the specific nature of each service and the applicable GST notifications are consulted.
- Compliance with GST regulations is crucial to avoid penalties and ensure correct ITC claims.

Consult with a GST professional for detailed advice tailored to your specific business transactions and documentation.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now