GST on Freight

[varsha jain]

Hello Sir, Mr X is purchasing Goods from Mr. A which is Shipped to Mr. Z. Mr X pays the Freight.The sale price Quoted to Mr. Z is inclusive of freight.

My Query is that

is Mr X liable to Pay RCM on Freight (Although he is Paying GST on Sale which is Inclusive of freight)

[KASTURI SETHI]

No double taxation is required by GST law or any other law. What is the GST rate of goods supplied by A to X ?

[Ganeshan Kalyani]

They are two separate transaction. If transporter raised invoice on you then you have to pay tax under RCM. The freight component which you add in your customer billing is to recover that freight cost. The tax which is paid under RCM on freight can be claimed as credit to offset against the tax payable on outward supply.

[varsha jain]

Dear Sir, as you said the freight component which you add in your customer billing is to recover that freight cost but i have to Charge GST on that Freight Amt being Composite Supply.and i have to pay under RCM Also

[Madhavan iyengar]

As explained by Ganeshan Kalyaniji is correct

There are two transactions

first when X is purchasing goods and engages a transporter and pays to transporter then X has to pay GST on reverse charge being services availed from GTA and take credit of RCM paid

Second transaction when X recovers the Freight on sale from Z, X has to charge the GST on entire value ( goods + freight) and rate of gst is as applicable to the HSN code of goods supplied.

[KASTURI SETHI]

I re-read query and replies. I agree with both Sh.Ganeshan Kalyani Ji and Sh. Madhavan Iyengar Ji. Well elaborated by Sh.Madhavan Ji. I think the querist is not under doubt now.

[Madhavan iyengar]

thank u kasturi sir for your kind words

AI Summary

Reverse charge on freight: purchaser pays GST to transporter and claims credit; must charge GST on invoice including freight. The purchaser is liable to pay GST under the reverse charge mechanism on freight paid to the transporter and may claim that tax as input credit; separately, when recovering freight from the consignee the purchaser must charge GST on the total invoice value (goods plus freight) at the rate applicable to the goods' HSN classification, thereby preventing double taxation.