Tax Liability on Transportation Charges in Invoice

Based on the type of person availing the service, the liability of tax falls upon the service receiver or the GTA. In addition to transportation services taken from a GTA, there can also be a case where the supplier of goods transports the goods to the recipient and levies transportation charges in the invoice. In such a case, let us understand how the transportation charges levied by the supplier is treated under GST.

In this regard, the areas to be discussed are:
1. Is there a tax liability on the transportation charges levied in the invoice? If so, who is liable to pay tax on this: is it the supplier or the recipient?
2. What is the rate of GST applicable to the transportation charges levied?
3. Can input tax credit be availed on tax paid on transportation charges?
Let us answer these questions:

1. Tax liability on transportation charges levied in invoice

The tax liability on transportation charges levied by a supplier of goods can be understood from the table below:

Type of supplier	Type of recipient	Is there a Tax liability?	Who is liable to pay the tax?
Registered	Registered	Yes	Supplier
Registered	Unregistered	Yes	Supplier
Unregistered	Registered	Yes, if the total value of supplies from unregistered persons made by the recipient exceeds Rs. 5,000 in a day	Recipient
Unregistered	Unregistered	No tax liability	—–

2. Rate of GST applicable on transportation charges in invoice

The transportation charges levied by the supplier of goods have to be included in the transaction value and GST is to be levied on the total transaction value. In case multiple goods are being supplied on which different GST rates are applicable, the transportation charges have to be appropriated to each item, based on quantity or value, and on the resulting transaction value for each item, the applicable GST rate is to be charged.
Example: Rohan Electronics, registered in Karnataka, supplies 10 televisions for value of Rs 30,000 each and 5 fridges for value of Rs. 40,000 each to a registered dealer, Praveen Home appliances, in Tamil Nadu. Rohan Electronics also transports the goods and charges Rs. 10,000 as transportation charges.
In this case, the rate of GST applicable to television is 18% and to fridge is 28% and transportation charges are levied on the entire consignment. Hence, the transportation charges need to be appropriated to each of the items, based on quantity or value. Let us appropriate the transportation charges of Rs. 10,000 to the items based on value.
The transportation charges appropriated to Televisions will be 3,00,000 (Value of televisions)/5,00,000 (Total value of the items)*10,000 (Transportation charges), which is Rs. 6,000. Similarly, the transportation charges appropriated to Fridge will be 2,00,000/5,00,000*10,000, which is Rs. 4,000.
Accordingly, IGST should be charged as shown below:

IGST @18% on transaction value of televisions (value of televisions + transportation charges appropriated to televisions, i.e. 3,00,000 + 6,000)	55,080
IGST @28% on transaction value of fridges (value of fridges + transportation charges appropriated to fridges, i.e. 2,00,000 + 4,000)	57,120

The invoice for this will appear as shown below:

3. Input tax credit of tax paid on transportation charges in invoice

Full input tax credit can be availed on the tax paid on transportation charges levied by the supplier of goods.

Source :tallysolutions

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ITC on Outstation Hotel Stays

For businesses, availing accommodation in destinations outside the State where they are registered, is common. This could be for business events, meetings, seminars, employee engagement activities, functions, etc. In the previous tax regime, under Service Tax, there was no concern with regard to ITC on outstation hotel stays. As Service Tax registration was a centralised registration, businesses registered under Service Tax could claim full ITC of the Service Tax paid on the accommodation charges, irrespective of the State where the accommodation service was taken.

Example: Ramesh Solutions is an IT firm in Delhi whose employees travel to Mumbai for a meeting and take accommodation for 5 days in a hotel in Mumbai. The total accommodation charges incurred by Ramesh Solutions is Rs. 50,000 and Service Tax @ 15% amounting to Rs. 7,500. Ramesh Solutions was eligible to avail full ITC of Rs. 7,500 paid.

Under GST, registration is no longer centralised but State-wise. Many businesses would hence not be registered in States where they do not have operations. When a business avails accommodation service from a hotel, the place of supply will always be ‘the place where the service is provided’, that is, the location of the hotel. In such a case, the tax charged on supply of accommodation services will be CGST + SGST of the State where the hotel is located. If a business does not have a registration in that state, it will not be able to take input credit of the tax paid on the accommodation charges. It will become an additional cost to the business.

Example: Let us consider the above example and assume that under GST, Ramesh Solutions only has registration in Delhi. On the accommodation charges of Rs. 50,000, CGST + SGST of Maharashtra will be incurred by Ramesh Solutions @ 9% each, amounting to CGST of Rs. 4,500 and SGST of Rs. 4,500. Ramesh Solutions will not be able to claim ITC on this tax paid, as it does not have a registration in Maharashtra.

Let us consider another example.

Example: Ramesh Solutions has its Head Office in Delhi and a regional office in Maharashtra. They have taken registration under GST in both these states. Few employees of the firm travel from Delhi to Mumbai for a meeting and take accommodation for 5 days in a hotel in Mumbai. The total accommodation charges incurred by Ramesh Solutions is Rs. 50,000 and CGST + SGST of Maharashtra @ 9% each, amounting to Rs. 4,500 each is leviable. Here, if Ramesh Solutions provides its Maharashtra GSTIN to the hotel for billing and the invoice is raised to the Maharashtra GSTIN, Ramesh Solutions can avail the ITC of CGST + SGST of Rs. 4,500 each.

Hence, businesses should ensure that whenever an accommodation is taken in a State where they have a registration, their GSTIN of that particular State is provided for billing.

Source :tallysolutions

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Everything You Need to Know Before Filing GSTR 1

GSTR 1 is the first of the GST Return Forms that a registered taxpayer needs to file on monthly basis.

The Goods & Services Tax (GST) is the newly launched tax system in India that was implemented on July 1. The new tax regime has completely replaced the existing indirect tax system of the country introducing many new terms and processes.

The old tax returns are now replaced with GST Returns. GSTR Forms are the special return forms used by registered taxpayers to file their tax returns on the common portal under GST. GSTR 1 of one of the GST returns forms.

What is GSTR 1?

GSTR 1 is the first of the GST Return Forms that a registered taxpayer needs to file on monthly basis. GSTR 1 Form will be used to file the details of the outward supplies (sales) made by a registered dealer during the particular tax period (month). The form has total 13 sections/tables. GSTR 1 is mandatory to file for every month even if there was no business activity (nil returns) for the given tax period.

GSTR 1 with Example

GSTR 1 is the very first of the GST return forms, and it is mandatory to file it in order to file the next returns including GSTR 2 and GSTR 3. Let’s understand the concept and process of GSTR1 Form with an example.

Suppose that you are a GST registered dealer who supplies furniture to small dealers. Now, if you are filing the GSTR 1 Form form for July month, the details of all the supplies made by you in this month will go into the form.

Your tax liability will be determined on the basis of the supply values and other things like input credits, etc. Also, the details you provide in your GSTR 1 Form for a particular recipient will also be available in the GSTR 2A form of that receiver.

When is GSTR 1 Due Date?

The due date for GSTR 1 Form is the 10th of next month for a particular tax period. For example, GSTR 1 for November month will be filed by 10th October.

Download GSTR 1 Format in PDF & Excel?

The GSTR 1 Form has to be filed in a specific format as specified by the GST Council on its portal. The GSTR 1 official format is mentioned below. All taxpayers need to file their returns only in the specified format on GST portal online.

There is also the provision of filing GSTR 1 offline where you can file the form, upload invoices in offline mode first and then upload it to the portal using this GST Returns Offline Tool. There are also some GST software applications in the market that allow you to file GSTR 1 and other returns from your desktop and/or mobile from a single dashboard.

In case if you want to check and download the GSTR 1 Form in excel format, you can do it here. We have attached GSTR 1 in excel format here so you can use it offline. You can use the offline form to practice and file GSTR 1 Form using the offline return filing tool.

GSTR 1 Form Excel Format Download

You can also download the GSTR 1 pdf format here but it is not allowed to file the pdf offline. However, you can use the official GST Returns offline tool if you want to file your tax returns in offline mode.

GSTR 1 Form pdf Format Download

Why is GSTR 1 important?

GSTR 1 is an important return form as the information provided by a supplier will be used to calculate his/her tax liability in GSTR 3 for the particular period. The details furnished by the supplier in the GSTR-1 Form will also auto populate in GSTR 2A for the recipient of such supplies.

Checklist for GSTR 1 Filing

There are a few things you will require to do or collect before going ahead with filing the GSTR-1 Form on the portal.

Here’s the list of things that need to be provided when filing this return:

• Aggregate turnover – For previous financial year (April 2016-17) and previous quarter (April 2017 – June 2017)
• GSTIN and invoice details, including the invoice number, date, value, tax rate and place of supply, for supplies made to a registered dealer.
• Invoice details, including the invoice number, date, value, tax rate and place of supply, for supplies under RCM (Reverse Charge Mechanism)
• Invoice details, including the invoice number, date, value, tax rate and place of supply, for inter-state supplies made to unregistered dealers and having invoice value of more than 2.5 lakhs
• Invoice details, including the invoice number, date, value, tax rate and place of supply, Bill of entry or shipping bill number and date, for zero rated and deemed supplies
• Consolidated invoice details, including the tax value, rate, tax amount and place of supply, for supplies made to unregistered dealers (not covered in rule 4)
• GSTIN and Invoice details, including the invoice number, date, value, tax rate and place of supply, for supplies to E-commerce (online marketplaces)
• Separate details/summary of Nil rated, exempt and non-GST supplies made in inter-state/intra-state to a registered or unregistered person
• If a debit or credit note or refund voucher is issued to registered dealer, the details of the document including document number, date, value, tax rate, amount and place of supply, and original invoice number and date or original dr/cr note or refund voucher number and date
• Document number, date, value, tax rate, amount, place of supply, and original invoice number and date, for debit or credit note or refund voucher, issued to unregistered dealers
• Gross value, net value, tax rate and place of supply for advances received and/or adjusted
• HSN Code, UQC (Unique Quantity Code), Total Qty, Total value, Total Taxable value and Tax details
• Documents issued during the particular tax period, including outward supply invoice, inward supply invoice (from an unregistered person), debit/credit note, revised invoice, receipt voucher, refund voucher, payment voucher, delivery challan for job work, the case of liquid gas, supply on approval and other cases.

Some of the items in the list may be optional based on the taxpayer, supply and other factors.

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Impact of GST on Common Man

With the Rajya Sabha passing all the four GST bills in the parliament a week back, the nation’s biggest and revolutionary tax regime GST (Goods and Services Tax) is all set to become a reality soon. Boasted as the most subversive tax reform in the country after independence, GST is expected to curb transactional costs by introducing a unified tax system stirring economic growth in the long run.

With the prospects that GST would improve the GDP by a couple of percentages, the reform in its entirety might come with a mixed bag of surprises for the common man.

Talking about its long-term impact, GST should mark a positive impact on most sectors. Based on the GST implementation experience derived from other nations, India might experience an inflationary impact especially during the transition stage, which is expected to fade with the rollout of measures such as anti-profiteering.

Yes, with the inclusion of anti-profiteering along with other counteractive measures, GST should lead to reduced cost for most of the supplies to the end-users in the long-run.

Here’s a quick look at what the GST could mean for the common man:

Services that are likely to become expensive include:

• Mobile phone bills
• Premiums for life insurance plans
• Investment management and banking services
• Online ticket booking services
• Basic luxuries such as DTH services
  

Prices of the following essential services are also likely to go up:

• Healthcare
• Residential rentals
• School and educational fees
• Rail/metro commute
• Courier services

Services that might see a price drop in most of the states are as follows:

• As the GST council has decided to include entertainment taxes in GST, movie tickets might turn cheaper in most of the states across the country.
• Dining out in restaurants/hotels may turn pocket-friendly in several states.

Vehicles and certain essential goods to witness price drop:

Under the GST tax system and the current supply chain ecosystem, the following might get cheaper:

• Two wheelers
• Luxury and SUV or premium cars
• Entry level sedans excluding small cars

Minimal impact:

Basis of the current supply chain landscape and other associated indirect taxes, the common man can expect marginal impact on white goods such as:

• Stoves
• Washing machines
• Televisions
• Shampoos
• Toothpastes
• Soaps

Prices of sin goods and aerated drinks to go up:

The government with its determined outlook towards injurious/sin goods, proposed a high tax rates on ‘sin goods’ that include cigarettes, aerated drinks and tobacco products. With a higher tax rate of around 40%, these goods may witness steep rise in their prices.

Positive impact lurking around the corner, expected in long-term!

Whilst the afore-mentioned forecasts are based on the statements/data released by government officials and authorities, it would be good to wait for the final verdict on the fitment that the GST council and government will release for a wide range of supplies and services. Nevertheless, with the enablement of anti-profiteering and other counteractive measures, GST is expected to curb costs for most.

Source:  The Economic Times

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