RCM applicability on Cotton Freight

[Balakrishnan Ramalingam]

My clients Spinning Mills are paying Lorry Freight payment for purchase of Cotton - Inter State. Please clarify whether RCM is applicable under GTA for the above Lorry Freight Payment?

AI Summary

GST on Cotton Freight: Reverse Charge Mechanism Applies if Consignment Note Issued; Raw vs. Processed Cotton Matters A user inquired about the applicability of reverse charge mechanism (RCM) on goods transportation agency (GTA) services for interstate cotton freight payments. It was clarified that GST under RCM applies if a consignment note is issued by the transporter. Cotton purchased from ginners or traders does not qualify as agricultural produce, thus GST is payable on freight charges. The exemption for agricultural produce applies only to raw cotton purchased directly from agriculturists. The discussion highlighted the distinction between raw cotton and processed cotton, emphasizing that the recipient must pay GST on freight under RCM if applicable.