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Frequently asked Questions : GST in Logistics

                   

1. What are various rates of GST applicable to logistics industry?

Description of Service

GST Rate

ITC

Transport of goods by rail

5%

with ITC of input services

Transport of passengers by rail (other than sleeper class)

5%

with ITC of input services

Services of goods transport agency (GTA) in relation to transportation of goods [other than used household goods for personal use]

5%
or

12%

No ITC
or

With Full ITC

Services of goods transport agency in relation to transportation of used household goods for personal use.

5%

No ITC

Transport of goods in a vessel including services provided or agreed to be provided by a person located in non-taxable territory to a person located in non-taxable territory by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India

5%

with ITC of input services

Transport of goods in containers by rail by any person other than Indian Railways

12%

With Full ITC

WebXpress support all type of businesses & software can be configured for any GST service and relevant rate.

2. Are we required to do state wise billing?

  • Most customers need to take input credit based in place of supply.
  • For transportation place of supply is where goods are received or from where goods are loaded for a paying party
  • Thus, customers have asked transporters to invoice them at booking location or at delivery location
  • This has required transporters to provide state wise invoices to customers

3. As a GTA, can transporter take input credit if we pay 5% GST? Can he set it off against input credit from say repair and maintenance, telecom services etc?

GST council has allowed GTAs to either opt for 5% GST with no input credit OR 12% GST with full input credit. This has to be declared by GTA at beginning of every financial year. In case of GST at 5%, GTA cannot take ANY input credit for any service.

4. If transporter is registered under GST as GTA, is he required to upload invoice data pertaining to GTA services under RCM in our GSTR1?

All companies registered with GST are required to upload invoice data in GST portal. In above case, GST amount will be zero and no GST needs to be paid.

5. If we have unloading charges, handling charges etc. in docket for a GTA, do we need to apply 18% GST on these? Does this mean same docket can have multiple GST rates?

No. Transportation and all allied services under GTA attract either 5% GST with no ITC or 12% GST with full ITC. There is no need to tax separate items in a docket at separate rates.

6. What is definition of Place of Supply from transportation perspective?

Place of supply is location where material is either picked up or delivered.

For example,

  • A company may have factory at say Nagpur
  • This factory may dispatch material from Nagpur to many places in India
  • In this case all transportation started from Nagpur will have place of supply as Nagpur in state of Maharashtra
  • Now- same factory is sourcing material from all over India and asks transporter to ship material say from Ludhiana in Punjab to factory in Nagpur. In this case too- place of supply will be Nagpur
  • Rule of thumb for transporters- place of supply is either booking or delivery location based on where customer has asked to be billed

7. If we are a 3PL with warehousing as well as GTA transportation, can we get set-off against transportation input services such as repair and maintenance?

If you register under 12% GST with full ITC, it is now possible to get set-off against all input costs. But company has to declare the same at the beginning of Financial Year.

8. Can transporter choose not to offer GTA service and offer full service with 18% GST rate? What are advantages and disadvantages?

Transporter has now option to offer 12% GST with full ITC as well, thus no need to offer 18% rate.

 

5% GST, no ITC

12% GST, full ITC

GST to be paid by

Customer

Transporter

Input credit on services such as repairs, communication etc.

No

Yes, full credit possible

Invoice amount to include GST

No

Yes

Customers can take input credit

Customer first pay 5% to government. Under reverse charge mechanism and set off against GST payable

Customer can directly take 12% credit

Effect on cash flow

No investment by transporter

Transporter has to pay 12% GST and await bill clearance by customer, thus investment for 60-90 days

Customer impact

Customer work is complicated due to more paper work, need to pay GST on behalf of transporter

Customer work is easier as transporters now aligned with all other suppliers

Type of logistics companies to benefit

Companies who only arrange for transportation- transport operators, brokers

Companies with multiple services such as warehousing, distribution, full truck movement

Transporters with large fleet as they can take all maintenance costs as input credit

 

DISCLAIMER: The following questions and answers are provided for general information only and may not be completely accurate in every circumstance