is RCM payable on GTA service if freight charges including in Invoice and tax charge on the rate which applicable on original item i.e. 18% and same amount paid to GTA

[Gaurav Goyal]

Dear Sir/Madam,

We charged freight charges on invoice and calculate GST on same rate as applicable on goods. But same amount of freight paid to GTA. Is GST to be paid on RCM also.?

Example:

Value of Goods 90000/-

Freight charges 10000/-

Taxable value 100000/-

GST@18% 18000/-

Total Invoice value 118000

Now we paid 10000 to GTA and my Freight account shown in Profit and loss account as 0/-(10000 Dr-10000 Cr).

Is RCM applicable on payment to GTA of 10000/-

Thanking you

[CA HemanthKumar]

Yes, you need to pay GST under RCM for the services obtained from a GTA i.e. on ₹ 10,000 @ 5%.

However, in case if the transporter is an individual truck owner and not a GTA, then the same would be an exempt service and RCM would not apply in such cases.

Regards

CA Hemanth Kumar.

[Rajagopalan Ranganathan]

Sir,

You have to pay gst @18% on the transaction value of the goods supplied, that is, ₹ 90,000/-. In respect of transport charges of ₹ 10,000/- paid to GTA you have to pay gst @5% under RCM. Since you have paid gst @18% on ₹ 1,00,000/- you need not pay separately again. Actually you have paid excess gst on service provided by GTA. You can claim refund gst paid in excess within two years from date of payment.

If you have paid the entire gst of ₹ 18,000/-by utilizing input credit available you have to pay gst on GTA again since payment of gst under RCM has to be paid in cash. This is for your information. You claim refund of gst paid on 10,000/- @18% since you have to pay gst on ₹ 10,000/-@5% under RCM in cash.

[KASTURI SETHI]

13% paid in excess on GTA service.

[KASTURI SETHI]

The querist has mixed supply of goods and supply of service. That is why mistake has occurred. From the query it is amply clear that transporter is GTA. No need to further explain as everything is crystal clear from the reply of Sh.Ranganathan, Sir.

[CHINTAPALLI MANIKANTA]

In my opinion,

If freight charge is added to the value of supply as you mentioned in the bill i.e recovered from the customer, GST levied on freight charges will be the same rate as that applicable to the supply value i.e. 18% and while paying RS.10,000 to GTA, if GTA opted for RCM you need to pay 5% RCM.

[Gaurav Narula]

You have mixed 2 transactions:

Transaction no 1 - Your invoice to customer

Example:

Value of Goods 90000/-

Freight charges 10000/-

Taxable value 100000/-

GST@18% 18000/-

Total Invoice value 118000

On this invoice, GST is correctly charged.

Transaction no 2 - GTA invoice to you

Now we paid 10000 to GTA and my Freight account shown in Profit and loss account as 0/-(10000 Dr-10000 Cr).

Assuming that GTA is not registered, it is an input service on which GST @ 5% is payable under RCM. Your netting off the transaction will not leads to change in tax position on inward and outward side.

Thanks

CA Gaurav Narula

Reach out to me @ [email protected]

AI Summary

Reverse Charge Mechanism (RCM) applies 5% GST on GTA freight; claim refund for excess 18% GST paid. A query was raised regarding the applicability of Reverse Charge Mechanism (RCM) on freight charges included in an invoice for goods, taxed at 18%. The freight paid to a Goods Transport Agency (GTA) was 10,000. Multiple responses clarified that GST under RCM at 5% is applicable on the 10,000 paid to the GTA, assuming the transporter qualifies as a GTA. If GST was already charged at 18% on the total invoice, the excess GST paid can be claimed as a refund. It was emphasized that GST under RCM must be paid in cash, and any excess payment should be reclaimed.