Transport Charges by road GST rate 5% or 18% which is better

[MUTHUKUMARAN K]

I am a transporter we arrange the transport for service receiver (Importer) and raise a transport invoice with 5% GST collect and paid till now. Now New GST update many of the transporter advised to bill the GST is 18%. But our Importer is uppose why you increse the GST on transport charges?. which percentage of GST is better than Transporter and Importer.

please advise.

 

[Sadanand Bulbule]

As per GST law (Notification 11/2017-Central Tax), transportation of goods by road is taxed at 5% GST.

The 18% rate applies only to other services where Input Tax Credit is available.

Hence, 5% GST is better, if you convince the importer to avoid disputes.

[MUTHUKUMARAN K]

Dear Sir, thanks your reply.

one more doubt 5% GST we billed and collect and paid. If our company (Transporter) Pay Rent, Telephone Bill, Stationary Purchase Bill and Computer Purchase Bill GST input is NIL correct sir.

[KASTURI SETHI]

5% rate of tax is far better than 18% (with ITC).  It is the safest from all angles i.e. Audit purpose, major hurdle of Section 17 (5) of CGST etc. Interest and penalty is also saved.

                       

[MUTHUKUMARAN K]

Dear Sir, thanks your reply.

one more doubt 5% GST we billed and collect and paid. If our company (Transporter) Pay Rent, Telephone Bill, Stationary Purchase Bill and Computer Purchase Bill GST input is NIL correct sir.

[Shilpi Jain]

Yes you are correct. If you collect 5% GST then you as a transporter will not get any input tax credit.

If you have a higher ITC available which you wish to use, you can convert to 18%.

If not huge ITC then you can continue with 5% GST or get the importer itself to pay under RCM and cancel your registration if feasible

AI Summary

Road transport GST rate choice affects input tax credit eligibility and compliance, influencing whether transporters claim or waive credits. Choice of GST rate for road transportation determines input tax treatment and compliance exposure: the concessional road transport rate disallows input tax credit for the transporter on overheads and capital purchases, while charging the standard rate allows claiming input tax credit but may change recipient relations; options include continuing on the concessional rate, adopting the standard rate to utilize credits, or arranging reverse charge accounting by the recipient and reconsidering registration.