rcm on freight billed to Customer

S. 2[30] "composite supply" means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply;

Illustration.- Where goods are packed and transported with insurance, the supply of goods, packing materials, transport and insurance is a composite supply and supply of goods is a principal supply;

hope it helps.

Rate of principal supply to be charged

thank you, but I still didn't understand, do I need to provide for rcm on the transporter's bill in my books?

Dear Meenakshi,

 

Your Query is regarding the supply of transport service procured by you (as seller of goods) for transporting goods to your customer. In this case, you (assuming a Business entity) would be liable to pay tax under RCM on transport services procured and you will be able to claim the Input tax credit of the same subject to payment of taxes.

Further, with regards to you being providing transportation services and charging the same on invoice to your customer is an outward supply.

 

Trust the above is helpful.

Regards,

Ronak.

dear ronak, thank you for your detailed explanation. I'm sorry to re question, when my customer is paying GST on the transportation in the sales bill, why do we need to pay RCM on that transport? just because the transport bill is on our name is it? I am also given to believe that GST on transport of outward supply can't be availed as ITC. correct me if I'm wrong. in that case, it's more like double tax paid..

Dear Meenakshi,

 

The transporatation service which you are providing is not liable to RCM i.e. it is an outward services provided by you on which forward charge applies (not reverse charge) and accordingly you will have to pay necessary GST on total value of the invoice (i.e. sale value of goods + freight).

 

Further, the tax on inward supplies which you pay under RCM on transporatation services (freight invoice in your name), you can avail input tax credit of the same subject to payment of tax.

 

Considering above, one is an outward service provided by you to your customer on which you pay tax and other is an inward suppy (though liable under RCM) but you can avail credit of the same against your outward supplies, there is no double taxation.

 

Regards,

Ronak.

dear ronak,

we use a transporter to provide outwardly Service. however, we only pay the transporter. my question is if i pay transporter, do I need to pay RCM on it? let's take an example.. Mr T is going to transport my goods from Mumbai to Delhi. Mr T raises a bill to me for rs 10. I sell my goods to Mr C in Delhi for rs 100+10 (transport) plus GST on 110.
now do I need to pay RCM on the rs 10 that i pay to Mr T?
I am not questioning about inward service. there is no inward supply here.
thank you for help me understand.