Question ID :
40603
GST on Outward supplies transportation
Company A is supplying Chemicals to Company B. As per PO Terms Company A shall arrange for Transportation & insurance on outward supplies and get the same reimbursed by B at actuals, for which Company A is raising two separate invoices , one is for goods with applicable GST And another invoice for Reimbursement of Expenses without charging GST,(since the Company is of the view that the services qualify as Pure Agent), further Company A is also paying GST on outward transportation under RCM basis and not availing any Input Tax Credit.
Query: 1
Whether the company A is liable to Collect GST on reimbursement of expenses (viz. Freight and Insurance)?
Query 2.
Whether the company A is eligible to take Input Tax credit on GST Paid under RCM basis for outward transportation?
Posted by
SUDHAKAR
on
Mar 09, 2020
Filed Under
GST
A Co can claim reimbursement at actual (inclusive of GST) disclosed on invoice from the vendor if other aspects of pure agents are fulfilled.
Since the incidence of services is not borne by A credit of tax paid under RCM is not available.
However, the said transactions is quite litigation prone, its better to charge transportation charges with GST by A Co to B Co and ITC can be claimed by A Co and utilise in payment of tax or
B Co. can make the payment of freight charges and accordingly liable to discharge GST under RCM and hence no exposure on A Co.
Posted by
SACHIN AGARWAL on
Jun 23, 2020