My company is located in Mumbai and I have a client who needs material in Tamilnadu. He needs the goods on freight paid basis. So now the when I send the goods via a transport the transporter will charge me 2.5% CGST and 2.5% SGST on reverse charge mechanism i.e. the tax will not be collected by them instead I need to pay the tax on the transporters behalf. So now this is a cost for me and also i have to pay tax against it as per RCM. So I want to know the following details in order to bill my client/recipient of goods.
1) Do I need to Mention freight charges separately?? if YES, then what will be the GST rate? should I need to mention the same freight charge as charged by the transporter to me in the invoice or i can increase the value of the freight by adding some profit on it? If NO, then can i adjust the cost of freight + tax levied on it in my product cost and invoice him??
2) Is the 2.5% CGST and 2.5% SGST charged by the transporter to me eligible for Input tax credit for me or the recipient of the goods. 3) also if you can share an invoice showing similar situation it would be of great help
You can show transportation cost separately in tax invoice or club as cost of material, it does not make any difference as GST rate will be same (rate of principal supply). If you are charging 18% on material then you need to charge 18% on transport charges also.
You can show any amount as transport charges, not necessarily equal to cost incurred by you but GST rate will be as mentioned above.
There is some confusion among experts whether credit can be availed or not. Some are of opinion that credit cannot be availed since in case of RCM you raise the sales invoice and thus become a supplier and supplier of GTA services cannot claim any input.
Clarification is required on the point of RCM credit on GTA.
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