Frieght charges on composite supply exempted goods

[Mohit Chhabra]

I sell wood charcoal (exempted) hsn 4402, if I add frieght charges in invoice , what will be tax on frieght, will it also be nill as frieght tax rate in case of composite supply is based on tax on goods supplied

 

 

[KALLESHAMURTHY MURTHY K.N.]

Sir, 

In my opinion, if the freight charges are separately charged in the bill, GST attracts for the supply of service.

[Shilpi Jain]

Whether a composite supply or not would not depend on how the price is charged.

If the transportation charges is for the product sold, then composite supply and no GST in this case.

There is an example given in the law which is similar and in that case also it is stated that the transportation charges will be treated as composite supply of goods.

[KASTURI SETHI]

The querist appears to be pro-active in this context. While entering into contract with the buyer, the terms and conditions of the agreement need to be drafted in such a way so as to include freight charges in the agreed upon price. Thus the transportation expenses/charges will be treated as composite supply as defined in Section 8 (a) of CGST Act, 2017.

Such agreement is legally valid contract as per Section 10Indian Contract Act, 1872.

AI Summary

Understanding GST on Freight Charges: Composite Supply Exemption for Wood Charcoal Under Section 8(a) of CGST Act 2017 A participant inquired about the tax implications on freight charges when selling exempted goods like wood charcoal under GST. One respondent suggested that separately charged freight attracts GST as a supply of service. Another mentioned that if freight is part of the product's sale, it constitutes a composite supply, thus exempt from GST. A third response advised drafting contracts to include freight charges within the agreed price, ensuring it is treated as a composite supply under Section 8(a) of the CGST Act, 2017, and is a legally valid contract per the Indian Contract Act, 1872.