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FREIGHT INWARD WITH RCM

27 January 2020

WE PAY FREIGHT CHARGES ON PURCHASE INTERSTATE AT OUR END.AS SUCH THESE ARE NOT INCLUDED IN PURCHASE INVOICE.HOW SUCH EXPENSES CAN BE ADDED TO COST OF STOCK ITEM

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3 Replies

Anup Agarwal (1184 Points)
Replied 27 January 2020

There are two points-

1. If you pay freight charges that are already charged by your supplier in invoice of goods, then you need not to pay RCM. Just book freight as direct expense.

2. If you pay freight directly to transporter and transporter doesn't charge GST then you will have to pay GST on RCM basis (If you are registered under GST or liable to get registration under GST). In this case also book freight as direct expense, and ITC of GST paid under RCM shall be allowed to you.

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Sivaramaraju G (Learner) (2398 Points)
Replied 27 January 2020

@ Anup My client is into the business of trading de-oiled bran(DOB). When my client is purchasing from supplier, he is giving invoice for DOB and paying half of the freight amount to transport and for the rest of the transportation he is giving freight bill to my client to pay for transporter, and for that half of the transportation cost supplier giving credit note my client. And my client is moving goods to his customers and ask them to pay the freight. In this case whether my client is liable to pay GST on RCM basis??

Anup Agarwal (1184 Points)
Replied 27 January 2020

Mr. Ramaraju,

In short your question is-

Supplier charges full freight to your client through it's invoice, and then issue credit note for half freight amount to your client. And Transporter is issuing it's invoice to your supplier and not to your client.

if situation is same as above-
Then your client need not to pay GST under RCM.