Impact of GST on Freight charges and Transport agencies
28 May, 2020
Impact of GST on Freight Charges and Transport agencies GST was officially implemented on 1st July 2017 in our country. Freight generally refers to all the bulk transport of goods through roadways or waterways or even by airways. Just as all services and goods in India, the freight and Logistics industry has also been affected by GST. Any mode of transport is generally referred to as the Goods Transport Agency also known as GTA. All the transporting agencies must issue a note on consignment of all the transports. The GST applies to rules on freights as provided by a transport agency. The following freight is exempted from GST. They include the transport of- -military equipment -organic manure -agricultural produce -milk and food grains like rice and flour -Registrar of the Newspapers for India magazines and newspapers -relief material for disaster -single carriage with a value less than 1500 rupees. All freight other than the above-mentioned ones has to pay 5% GST rate. GST will be charged as per the normal GST rate. All freight and logistics services and even goods movement through any transport is treated as services supply and the applicable GST on the freight forwarding depends on the transport, whether it is domestic or international. When the GST is paid for any freight, it is paid by the service recipient and also the person who bears the freight charges. The tax on freight is paid by the recipient or even by the transport agency depending only on whether the recipient belongs to specific-persons category. All the following people are liable to pay GST if- -The person registered by GST -A society established under any law -An industry under the Factories Act of 1948 -A corporate body under any law -A casual taxable person -A partnership firm including the association of persons -A society under the Societies Registration Act of 1860 If the transport agency delivers to a person who doesn’t belong to the above categories, the GTE will be liable to pay on their behalf. The mentioned classes are Un-registered sole proprietors, Un-registered Hindu Undivided Family, Un-registered body of Individuals. There are two options available. One is to pay 5% tax with no input tax credit and the other option is to pay 12% tax at full input tax credit. A Transport agency providing services to specified persons doesn’t have to register itself under GST even if the annual turnover is above the threshold limit. If they pay taxes, they don’t have to get GST registration. If a GTA provides services to people not in the category too, they have to register under GST only if the turnover is above the limit. The GST portal houses the Form GST ENR-01 provision which can be used by all unregistered GTAs to enrol themselves. The registered agencies can generate e-bills using the enrolment number. These guidelines and rules have been fixed in a very effective manner by the Government of India. They are to be followed by all freight and Logistics industries immediately upon the implementation of the GST.