GST ON TRANSPORTATION CHARGES
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|
||5% No ITC or 12% with ITC
|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.
|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.
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,
|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.|