GST on Freight and its treatment

[CABIJENDERKUMAR BANSAL]

Dear Sir,

Now as GST regime, GST is also charged if supplier is charging Freight on invoice.

In some cases, supplier simply levies Freight without SAC code and charges GST.

Our query is whether we should open a SAC code and show credit on freight amount separately ? or it should be apportioned over the products purchased and taken credit according to that ?

Please clarify ?

CA Gorav Goyal

[KASTURI SETHI]

Transaction value is required to be inclusive of all expenses including freight, insurance etc. as per Section 15 (1) of CGST Act. You can take ITC without apportionment, if otherwise eligible.

[Ganeshan Kalyani]

If the rate of product on invoice is same then no need to apportion the freight element.

[DR.MARIAPPAN GOVINDARAJAN]

Up to the turnover of ₹ 1.5 crores (I suppose) the supplier need not indicate HSN code in the invoice. GST can be levied as per the existing rate. In such cases, in my opinion, you may take credit for the entire amount.

[MADAN RAHEJA]

Agreed with Sh. Sethi. Since freight is part of transaction value of goods, no need for showing seperate SAC code for it. Only HN for the goods, if applicable, may be mentioned.

[Kishan Barai]

Let's make it simple

For e.g. you buy product of 100 INR with 18% GST with freight cost 10 INR so your total bill would be 110 + 18% = 129.28

Now you buy product of 100 INR with 28% GST with freight cost 10 INR, your bill would be 110 + 28% = 148.8

Freight would be considered as a composite supply in GST

[Kishan Barai]

SAC Code of freight would be shown by freight forwarder to your supplier availing his services but when you buy from him, he is not doing freight business; he is supplying products to you.

[CABIJENDERKUMAR BANSAL]

Thanks to all for your reply.

Mr. Kishan Barai, I understood that he is not doing transport business and so no need to show SAC code by that supplier in Invoice.

Then when we taken ITC , under which code we should take credit:- HSN code of product or we should take in SAC code of Freight. ?

Please clarify.

[KASTURI SETHI]

HSN code of product.

[Kishan Barai]

HS Code

[CABIJENDERKUMAR BANSAL]

sir, if there are two/three products having different HS code then on which HS code we will show ITC on that Freight ?

[KASTURI SETHI]

Sir,. When the element of freight has been included into transaction value for payment of GST, we should not talk of independent existence of freight for ITC. Pl. Read definition of Composite Supply and mixed supply along with definition of transaction value. Picture will become clear.

[CABIJENDERKUMAR BANSAL]

Sir, i totally agree with you. we should not talk individually about freight.

Basically i want to understand how should we claim that gst on Freight.

Should we apportion it over main products and show accordingly in different hsn code or in any of hsn code over invoice ?

[subramanian vijayakumar]

It) is composite supply. I agree with the experts view no need for hscn

[Kishan Barai]

If it's mixed supply freight would be charged as per Product with maximum GST rate.

[Himansu Sekhar]

Please refer q 47 of tweet FAQ.

[shashi pandey]

If in a Tax invoice, there are different gst% i.e. 5%,12% etc. on line items,then at what % GST will charge on freight charges

Please Advice

[KASTURI SETHI]

Rate of GST on amount of freight has no link with the applicable rate of GST on goods. Both are separate. If you have some other doubt, mention specifically.

AI Summary

GST on freight treated as part of transaction value; input tax credit should be claimed against goods' HSN allocation.
Freight charged on an invoice is part of the transaction value for GST and generally need not be separately shown with an SAC code; when included in transaction value freight does not retain independent existence for input tax credit and eligible recipients may claim ITC without separate apportionment. For invoices with multiple goods at different GST rates, freight is typically treated as part of the composite supply of goods and ITC should be allocated consistent with the goods' HSN classification, applying composite/mixed supply principles and the transaction value definition.