GST on GTA. Trouble ahead

By- Tansher Singh

The GST on the items transported many transporters have changed from 18%/12% to 5%/exempt. While the GST on freight has increased from 12% to 18%. I.e, the output of our end user has reduced, while their input has increased. This is causing an inverted duty structure for our customers. Therefore, a large majority of our customers are requesting us to bill them in RCM. This issue is even worse for traders. I will explain with an example. Lets assume A trader buys a 20MT truckload of almonds for 60,00,000 and sells it at a 5% margin for 63,00,000.

His output will be calculated on the profit and will be 5% of 3,00,000 = 15,000. My freight under18% with ITC will be 1,00,000 + 18% GST. I.e.18,000 GST. The trader would therefore request me to bill him under RCM to avoid the inverted tax structure. Moving to RCM will require us to reverse our capital input credit taken, which is a tremendous liability and will cause an unsustainable financial hit, ultimately increasing logistics cost. We invested in trucks not anticipating this change and are left in a very difficult position where we need to cater to the needs of our customers, whilst balancing the need for higher working capital. Our plea to the government is to consider our case and reevaluate GST to 5% with ITC for transportation or to provide a solution to transition into RCM.