GST on Transportation Charges | Tally

GST ON TRANSPORTATION CHARGES


  • 1. GTA Services in India
  • 2. What is Goods Transport Agency (GTA)?
  • 3. Classifying the services provided by an GTA operator
  • 4. How to identify a consignment note
  • 5. GST on Transportation Charges
  • 6. Issues: GST on Transportation Charges in Invoice
    • a. GST Transport charges on
    • b. Rate applicable on GST Transport Charges:
    • c. Who is to pay transport charges under GST?
    • d. Who has to bear the GST on transportation charges :
    • e. Treatment when GST Transport Charges is added in the invoice by the supplier of goods or Services :
  • 7. How to add Transport Charges in GST invoice Tally.ERP9

1. GTA SERVICES IN INDIA

The most commonly used form of goods transport in India is via road. The data from National Highways Authority of India, about 65% of freight and 80% passenger traffic is carried by the roads.

Transportation of goods by road are done by transporter or courier agency. This article will discuss the transporter, i.e., The GTA.

2. WHAT IS GOODS TRANSPORT AGENCY (GTA)?

Goods Transport Agency (GTA) means any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called.

It is to be noted here that, only those issuing a consignment note are considered as a GTA. Thus, a consignment note is an essential condition to be considered as a GTA.

3. CLASSIFYING THE SERVICES PROVIDED BY AN GTA OPERATOR

Road transportation services or any related service, such as loading, unloading, packing, unpacking, etc. falls under the services provided by Goods Transport Agency but provided a consignment note is issued by such operator in respect of each of services provided by him.

4. HOW TO IDENTIFY A CONSIGNMENT NOTE

  • Serial Number
  • Names of the consignor and consignee
  • Registration number of the carriage used for transport of goods
  • Details of the goods transported
  • Place of origin and destination
  • Person liable for paying tax

5. GST ON TRANSPORTATION CHARGES

Services by GTA Transportation charges GST rate
Carrying-
  • agricultural produce
  • milk, salt and food grain including flour, pulses and rice
  • organic manure
  • newspaper or magazines registered with the Registrar of Newspapers
  • relief materials meant for victims of natural or man-made disasters
  • Defence or military equipment
0%
Carrying-
  • Supplies, where consideration charged for the transportation of goods on a consignment transported in a single carriage is less than Rs. 1,500
0%
Carrying-
  • Supplies, where consideration charged for transportation of all such goods for a single consignee does not exceed Rs. 750
0%
Carrying-
  • Any other goods
  • Used household goods for personal use
  • goods of unregistered persons
  • goods of unregistered casual taxable persons
5% No ITC or 12% with ITC
0%
0%
0%
Transporting goods (GST paid by GTA) 5% No ITC or 12% with ITC
Hiring out vehicle to a GTA 0%

6. ISSUES: GST ON TRANSPORTATION CHARGES IN INVOICE

a) GST Transport charges on: GST should be charged on the total taxable value i.e., including the Freight Charges.

b) Rate applicable on GST Transport Charges: Freight charges/Freight forwarding added to Invoice should be charged at such rates applicable for the goods or services. For ex : if the goods transported in GST is a goods falling under 5% slab then the Freight charges will also be charged at the same rate.

c) Who is to pay transport charges under GST? It is to be understand here that the person who pays Freight is the recipient of service. But the assessment of two situations makes it clear about the taxability of GST on transportation charges.

Situation Liability
Paid Lorry Freight by the consignor to GTA (Paid consignment) Consignor becomes the recipient of the service as he will be liable to pay GST on Transportation Charges.
Paid Lorry Freight by the consignee to GTA (to pay) Consignee becomes the recipient of the service and he will be liable to pay GST on Transportation Charges

d) Who must bear the GST on transportation charges: This is based on the following 2 scenarios: Recipient belongs to the specified category of persons, Or Recipient does not belong to specified category of persons.

Specified Category persons

When a Goods Transport Agency (GTA), whether registered or unregistered, provides taxable transportation or related services to any of the specified persons, the recipient of the service is liable to pay tax on reverse charge basis. These specified persons are :

  • A person registered under GST
  • A factory registered under or governed by the Factories Act, 1948
  • A Society registered under Societies Registration Act, 1860 or under any other law for the time being in force in any part of India
  • A co-operative society established by or under any law
  • A body corporate established by or under any law
  • A partnership firm, whether registered or not under any law, including association of persons
  • A casual taxable person

Note 1: All the persons specified above are mandatorily required to register under GST, irrespective of their turnover, as they are liable to pay tax on reverse charge basis.

Note 2: Any person in the above list of specified persons who pays tax on reverse charge basis on transportation service received from a GTA, is eligible for full input credit of the tax paid.

Non- specified Category persons

These are :

  • Unregistered Sole Proprietor
  • Unregistered HUF (Hindu Undivided Family)
  • Unregistered BOI (Body of Individuals)

Note :

  • When a registered GTA provides transportation service to any of these persons, the GTA is liable to pay tax on the supply
  • This is applicable only when the GTA is registered
  • If the GTA is also unregistered, there will be no tax liability on the GTA or the recipient
  • In such cases, where a registered GTA is liable to pay tax @ 5% on transportation service, 2 options have been given to them:
    • Pay tax @ 5% with no input tax credit
    • Pay tax @ 12% with full input tax credit

e) Treatment when GST Transport Charges is added in the invoice by the supplier of goods or Services: GST will be calculated on the total taxable value (including Freight charges).

Beside CGST law on Value of supply says that taxable value to mean transaction value which includes.

  • Any taxes, duties, cesses, fees & charges levied under any law other than GST law if charged separately by the supplier
  • Any Amount -Liable to Pay – Supplier-Incurred By – Recipient and-Not included in the price actually paid or payable for the supply
  • Incidental expenses i.e. Packing & Commission etc.
  • Interest, Late Fee or Penalty for delayed payment
  • Subsidies provided by State or Central Government

7. HOW TO ADD TRANSPORT CHARGES IN GST INVOICE TALLY

Step 1 Enter gateway of Tally.ERP9
Step 2 Select Account Info tile
Step 3 Under Create ledger tile,
  • Create ledger Transport Charges GST under the group sales ledger
  • Select GST Rate to be applicable
  • Now fill up the SAC code, description of service and tax rate
Step 4 Click Yes to save the new ledger created
Step 5 Visit back gateway of Tally.ERP9 and now select the Accounting Voucher tile
Step 6 Under Accounting Voucher select Sales voucher and start filling up quantity, product description, rate and in next line as below item select the Transport Charges GST ledger created and feed up the value of Transport charges GST
Step 7 Select the appropriate GST Tax liability ledger for the Outward supply made by you. System will now automatically calculate GST on Taxable value i.e., your value of supply including Freight Charges.


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