GST when goods are Supplied with in India on FOR (Materiel + Freight) Basis

[Rohit Bhura]

We supply goods to Various Industries in India. In Some Case Even the Freight is paid by us (Consigner) to GTA i.e. Transport Company/Truck Owners and all Consignees are Pvt Ltd / Ltd. Consignee Release the Material & Freight directly to our bank Account.
Now who will pay GST on Freight & how should we invoice for our Material.
what is the Consignee is Located in J&K

Rohit Bhura

[KASTURI SETHI]

GST on freight will be paid by consignee under RCM.Show freight separately in the invoice . Regarding the location in J & K State, still situation is fluid. It will be cleared before 30.6.17.

[Rajagopalan Ranganathan]

Sir,

If you despatch the goods on 'paid' basis then you have to pay the GST on GTA service. If you despatch the goods on 'to pay' basis then GST on GTA is to be paid by the consignee.

As far as J & K is concerned the assembly of State of J & K is yet to pass the State GST Bill. May be it may opt for ordinance route. However this is to be done before 1.7.2017. We have to wait and see.

[Rohit Bhura]

Thanks for the response. Is this invoice correct

Material 10,000

Igst. 500

Freight 10,500 (inclusive of GST 5%)

Total : 21,000/-

Our Material is under 5% GST tax bracket.

We will pay 10,000 to Transporter/Truck Owner and 500/- to Government as GST on Freight paid to GTA.

Is my understanding correct?

For J&K it would be same, but as GST has not applied so, if freight is on to pay basis we will not add it in invoice and Transporter will collect 10,500 and it would be his his responsibility to deposit ₹ 500 GST.

Is this also correct.

Thanks In adv.

[Rohit Bhura]

What if a GTA is not involved in the transaction i.e. we directly contact a truck owner for supplying the good and the freight is paid by us or the Consignee is from J&K. So does it still come under GST?

[Rohit Bhura]

Would we get input for the GST paid on freight inward & Freight outward under RCM.

[KASTURI SETHI]

The words, "5% with NO ITC " has been mentioned in the list of rate for services approved by GST Council. It is applicable not only for transporter but also for consignor/consignee (who pays the freight).

If you hire truck yourself for transportation of goods by road and pays the freight, even then ITC is not allowed. I mean to say even in the absence of 'consignment note', taxable service stands provided.

If truck belongs to factory owner/consignor/consignee, then no question of freight.

AI Summary

GST on freight: recipient liable under reverse charge when consignee bears freight; show freight separately on invoice.
GST on road freight is a GTA service; where consignee bears freight it must be paid by the consignee under the reverse charge mechanism and shown separately on the invoice. If consignor pays the GTA for a paid shipment, the consignor must pay GST. The GTA low-rate provision disallows input tax credit for the payer of freight, and direct hiring of a truck owner still attracts GST; no separate freight arises only when the owner's vehicle is used.