GST on Freight Charges and Agency Invoice

[FrJOE ARUNsjDirector]

Respected Members,

Query 1: We have a business wherein we would be co ordinating with the transporter and buyer for shipment of goods, in this scenario the transporter would invoice to us and we would invoice the same amount (cost to cost) as charged by the transporter to the buyer - Please advise how to go about the GST portion, should we pay GST on RCM charged by the transporter and invoice 18% to the buyer, then the cost for the buyer would be more

Query 2: We would charge the Liaision fee for booking trucks from transporter for the buyer in this scenario are we liable to charge GST at 18%, please advise the correct treatment

Query 3: Will there be any difference if we have 2 invoices separately

Thanks in advance

[KASTURI SETHI]

Are you talking of 'Intermediary Service' between transporter and buyer ? If it is so, such service does not fall under RCM. However, query-wise reply is as under:-

1. RCM comes into play only when GTA opts for payment of GST under Forward Charge Mechanism and for this mechanism he will have to intimate the department in the month of April every year. After opting for FCM, GTA will pay GST @12% (6 % +6%) and avail ITC.Hence Consignor or consignee will not pay GST in this scenario under RCM. See Notification No.22/17-CT(Rate) dated 22.8.17 amending Serial No. 1 of Notification No.13/17-CT(Rate) dated 28.6.17.

2.Liasoining is taxable @18% . It is intermediary service.

3. There is no legal hurdle in maintaining two invoice books for two different purpose.

 

[FrJOE ARUNsjDirector]

Dear Sir,

What if the GTA is not registered under GST, then we have to pay on RCM at 5% and invoice to the buyer at 18% since we are not transporters.

Will the position change if we also become GTA, please advise

[KASTURI SETHI]

Best option is to get yourself registered as GTA under FCM and pay GST and avail ITC. Thus it will become cost neutral not only for you but also for your buyer and, in turn, consumer will not suffer. The option of 18% is not digestible.

AI Summary

Reverse Charge Mechanism applies to GST on transport services when GTA payment option affects liability and intermediary fees are taxable GST liability for freight coordination distinguishes GTA transport services and liaison/intermediary services. If a registered GTA elects the Forward Charge option and gives the required intimation, the GTA will charge GST under forward charge and claim input tax credit, removing any reverse charge obligation on consignor or consignee. Liaison services provided by the coordinator are taxable as intermediary services and should be invoiced separately; maintaining separate invoices for transport and liaison is legally permissible.