GST Impact On Transportation of Goods: Check Impact of GST on Transportation By Road with Rates, HSN Codes, Place of Supply, Valuation, ITC & Time of Supply. Goods and Services Tax (GST) is a flawless taxation system which would enhance transparency and timely compliances in the taxation structure. The success of GST depends upon its proper implementation and I believe if the appreciations among people are conquered, we can make a quantum leap towards a bright future.Now check more details for Impact of GST on Transportation of Goods Industry from below…
GST Impact On Transportation of Goods
Composite Supply
What is Composite Supply?
A supply naturally bundled in the course of business, consisting of:
- One or more goods/services
- Service + Goods
- Principal Supply (Essentiality concept) – Tax rate is determined based on such supply.
- Ex: Loading/unloading + storage + Logistics services
Why is it essential?
- The Software must be able to identify a service, which has more than 1 service.
- Operations personnel must understand the concept of Principal Supply, as it must be decided by a person who has experience in the logistic sector.
- The rate at which the service is taxable, and the classification is dependent on above.
- If possible, streamline the sub-heads in the revenue line to ease such above procedure
Mixed Supply
What is Mixed Supply?
A two or more supplies provided at a single price, which is not a composite supply.
Ex: ‘All in 1’ pricing mechanism, may be avoided.
Taxability – GST shall be payable on entire value at the highest rate applicable for service forming part of the mixed supply.
Any consequences?
- A single price is keyed in for various services provided. The Software may not be able to distinguish the same from a standalone service.
- Operations personnel must understand the concept of Composite Supply and its relation to Mixed Supply.
- Taxable at the highest rate applicable from the various services provided.
- Suggested to convert such transactions into Composite supply in GST
Classifications Possible- Rate
- Hiring of Vehicle/ Renting? – 28%
- Leasing of vehicle – 28%
- Transporter ( Lorry owner/ operator) – nil
- GTA – in relation to transport + Consignment note issued – 5% + RCM
- Courier – 18%
- Storage & Warehousing – 18%
- Packing – 18%
- Logistics , Freight Forwarders – 18%
- Business Support?- 18%
Transportation- goods – Exemptions
- Entry 7 of Not. 12/17 – Govt also liable for transportation of goods to entity upto 20 Lakhs – No condition
- Entry 8 – Govt to another govt – Liable for same
- Entry 9 – Govt services upto 5K – Liable
- E 18 – Transportation other than GTA or courier –Nil
- E 21- agricultural produce, less than 1500 or 750 or milk, salt, food grain including flour, pulses and rice.or organic manure, newspaper, defense/ military
- E 22 – Hiring to STC or GTA – Nil
Other Aspects
- Rate – 5% without ITC – forward charge
- Reverse Charge – GTA to factory, society, co-operative, regd under GST, partnership + Aop, Casual Taxable person. – No need to register but enroll and file ENR-1??
- Difference b/n GTA & Transporter
- Whether B2B- whether credit available?
- Whether B2C – whether credit available?
- What about hamali, storage, packing in course?
- Logistic provider engaging GTA? Credit
Difference B/n Transporter & GTA/ Courier
- One does not issue Consignment note which can be endorsed ( negotiable) : Auto- intra city movement, daily/ weekly bill issued
- Door to door express cargo service ( pick up & drop to specific location + time commitment. Thin line
Difference b/n hiring & transfer
- Hiring = with driver – risk of vehicle with the owner – 18%
- Transfer of right = Give for some time- daily/ weekly/ monthly – Rate as applicable to truck – 28%
Place of Supply – Transporters
When Service Provider (SP) & Recipient of Service (RS) are within India:
Place of Supply (POS) – International
Recipient of Service is outside India:
| Nature of Service | Place of Supply (POS) |
| 1.Services supplied in relation to Goods which are made available to the recipient or his agent | Location where Services are Actually Performed |
| 2.Where the Services are Supplied to more than one location, including location in Taxable Territory | Location of Taxable Territory |
| 3.Where the Services are Supplied to more than one State or Union territory | POS shall be Location in each state where such supply made |
| 4.Services in relation to Transportation of Goods, other than by way mail or courier | Place of Destination of Such Goods |
| 5.Any other cases | Location of Recipient of Services |
Restriction on ITC
Calculate Additional Credit
- Vehicle cost – 5 L – GST 1.40 Lakhs
- Servicing & spares per year – 2 Lakhs – 0.40 Lakhs
- Lubricants – 10 Lakhs – 2.80 Lakhs
- Bank etc 2 Lakhs – 0.40
- Reduced cost of Diesel- open now- Crude around $45
Per truck – 1st year – 6.20 Lakhs loss
Who can avail the credit?
- Trader/ Importer
- Manufacturer
- Service provider
- CHA
- Freight Forwarder
- GTA services availed and passed on with margin. Can 2 issue GTA?
Who cannot avail the credit?
- Unregistered Dealer
- Exempted Goods/ Service providers: Educational/ Health Care/ Government/ Religious
- Exporters ,SEZ, EOUs will have to go for refund
Impact on Business
- Erosion of large un-organized players but Large investments, FDI’s & stiff competition expected from organized players
- Customer Perception as benefit to industry – Anti-profiteering
- Consolidation of warehouses – Central warehousing / Larger facilities to be established
- Existing warehouses to be shifted to more strategic locations due to changed business scenario
- Higher logistics preference due to removal of warehouses
- More transportation time due to check post delays being avoided
- Eligibility of VAT credits on vehicle/capital goods used for movement of goods
- Relations & compliance of vendors & customers
- Aviation Fuel, Petroleum products outside GST
- Widened Tax base
- For ex: Imports &
- Exports billed in India
- Increase in rate of Tax
- Registration, Returns, Matching principle & Invoicing challenges
Areas of Issues
- GTO also must be brought within the Tax Net – No distinction between GTA & GTO – similar tax treatment for both
- Law relating to E-Way bills must be eased
- Clear distinction between GTA and Courier services to avoid disputes in GST
- Back door state trade barriers must be avoided – Permits must be online and hassle free
- Accidental Damages – Earlier not includible in value
- Increase in Rate of Tax
RCM Liability
- Presently 5-7% is minor costs incurred
- RTO checkpost
- Snacks
- Maintenance
- Repair
- Hamali
- Rent for stop/ hotel
- …many many more
Impact on Logistics – Road
| Particulars | Earlier Regime | GST Regime |
| Applicability | Taxable | Taxable |
| Rate of Tax |
|
|
| Classification | Goods Transport Agency / Courier Services, Cargo Handling | Goods Transport Agency / Courier Services, Cargo Handling |
| Value / Abatement | Gross Value
|
|
| Time of Supply | On Issue of invoice – (when not issued within 30 days – date of completion)
If advances received – on receipt |
On Issue of invoice – (when not issued within 30 days – date of completion)
If advances received – on receipt |
| Place of Supply | In Domestic – Not Relevant
In International
|
In Domestic
In International
|
| Exemptions | •UN / Specified International orgns •Bio-medical waste / common effluent Treatment •Upto Rs.750/ 1500 •Agro produce, defence, newspaper, chemical fertilisers, milk, rice etc |
•UN / Specified International orgns •Bio-medical waste / common effluent Treatment •Upto Rs.750/ 1500 •Agro produce, defence, newspaper, milk, rice, organic manure, etc. |
| Reverse charge | In case of GTA other than for individuals and HUF | In case of GTA other than for individuals and HUF |
Impact on Supply Chain Management
| Particulars | Earlier Regime | GST Regime |
| Taxability | Taxable | Taxable |
| Rate of Tax | 15% (14% + 0.5% + 0.5%) | 18% |
| Classification | Service – Storage & warehousing | Service – Storage & warehousing |
| Value – abatement | On Gross Value charged | On Transaction value – unless related party transactions Add: related exp recovered, Less – pre agreed discounts |
| Time of Supply | On Issue of invoice – (when not issued within 30 days – date of completion)
If advances received – on receipt |
Earlier of:
|
| Place of Supply | Domestic – Not relevant
International – Location of immovable property |
|
| Exemption | Exemption – Storage of agriculture produce & rice + Cotton | Exemption – Storage of agriculture produce & rice |
| Reverse charge | Not applicable | Not applicable |
Impact on Freight Forwarding
| Particulars | Earlier Regime | GST Regime |
| Rate of Tax | 15% (14% + 0.5% + 0.5%) | 18% |
| Classification | Service – Storage & warehousing | Service – Storage & warehousing |
| Value – abatement | On Gross Value charged | On Transaction value – unless related party transactions . Add: related exp recovered, Less – pre agreed discounts |
| Time of Supply | On Issue of invoice – (when not issued within 30 days – date of completion)
If advances received – on receipt |
On Issue of invoice – (when not issued within 30 days – date of completion)
If advances received – on receipt |
| Place of Supply | Location where services are actually performed | Tax to be charged as per PoS which would be as below:
|
| Exemption | Exemption – cargo handling of agriculture produce + rice, cotton | Exemption – cargo handling of agriculture produce + rice |
| Reverse charge | Not applicable | Not applicable |
Impact on Package Handling
| Particulars | Earlier Regime | GST Regime |
| Taxability | Taxable | Taxable |
| Rate of Tax | 15% | 18% |
| Classification | Business Auxiliary Services | Business Auxiliary Services |
| Value – abatement | On Gross Value – Commission retained/received- no abatement | On Transaction value – unless related party transactions . Add: related exp recovered, Less – pre agreed discounts |
| Time of Supply | On Issue of invoice – (when not issued within 30 days – date of completion)
If advances received – on receipt |
Earlier of:
|
| Place of Supply | Domestic – Not relevant
International – No cases |
Tax to be charged as per PoS which would be as below:
|
| Exemption | No Exemption | No Exemption |
| Reverse charge | Not applicable | Not applicable |
Restructure for B2B with credit & B2B – no credit + exempted products
- Two Entities
- New Vehicles in A – new entity
GTA service taken & passed on
Freight Forwarder, Logistics for Exporter, B2C, B2B no credit ( power, education, healthcare….
- A. As pure agent ( no margin)
- B. As margin adder – Use of consignment note of passer on?
Specific Issues – Interactive Discussion
- Delegates issues……..
- Revised BGM — August Middle?
- Faculty Identification Program – August 2017?
- Further questions – pdicai.org
- Online certificate course available
- GST evaluator, member of group…..
Recommended Articles
- GST Login
- HSN Code List
- GST Registration
- GST Forms
- GST Invoice Rules
- Returns
- GST Anti profiteering
- Legal Provisions
- GST Reverse Charge
