✈️Logistics Businesses: Are you charging the right GST? 🚛🚂

[Pradeep Reddy]

If your 𝗹𝗼𝗴𝗶𝘀𝘁𝗶𝗰𝘀 𝘀𝘁𝗮𝗿𝘁𝘂𝗽 transports goods using 𝗺𝘂𝗹𝘁𝗶𝗽𝗹𝗲 𝗺𝗼𝗱𝗲𝘀 —road, rail, or air—do you know the 𝗰𝗼𝗿𝗿𝗲𝗰𝘁 𝗚𝗦𝗧 𝗿𝗮𝘁𝗲? 🤔

A 𝘄𝗿𝗼𝗻𝗴 𝗰𝗹𝗮𝘀𝘀𝗶𝗳𝗶𝗰𝗮𝘁𝗶𝗼𝗻 𝗰𝗮𝗻 𝗶𝗺𝗽𝗮𝗰𝘁 𝗰𝗼𝗺𝗽𝗹𝗶𝗮𝗻𝗰𝗲 𝗮𝗻𝗱 𝗳𝘂𝗻𝗱𝗶𝗻𝗴! 💰

𝗘𝘅𝗮𝗺𝗽𝗹𝗲: 📦🚛✈️ A startup ships goods 𝗳𝗿𝗼𝗺 𝗗𝗲𝗹𝗵𝗶 𝘁𝗼 𝗕𝗮𝗻𝗴𝗮𝗹𝗼𝗿𝗲:
🚚 𝗕𝘆 𝗿𝗼𝗮𝗱 to a railway station.
🚆 𝗕𝘆 𝘁𝗿𝗮𝗶𝗻 to Bangalore.
🏠 𝗕𝘆 𝗹𝗼𝗰𝗮𝗹 𝘁𝗿𝗮𝗻𝘀𝗽𝗼𝗿𝘁 for final delivery.

⚠️𝗕𝗮𝗰𝗸-𝘁𝗼-𝗕𝗮𝗰𝗸 𝗧𝗿𝗮𝗻𝘀𝗽𝗼𝗿𝘁 𝗔𝗿𝗿𝗮𝗻𝗴𝗲𝗺𝗲𝗻𝘁𝘀 – Many startups 𝘄𝗼𝗿𝗸 𝘄𝗶𝘁𝗵 𝘁𝗿𝘂𝗰𝗸 𝗼𝘄𝗻𝗲𝗿𝘀, 𝗿𝗮𝗶𝗹𝘄𝗮𝘆𝘀, 𝗮𝗻𝗱 𝗰𝗼-𝗹𝗼𝗮𝗱𝗲𝗿𝘀. However, the startup𝗿𝗲𝗺𝗮𝗶𝗻𝘀 𝗿𝗲𝘀𝗽𝗼𝗻𝘀𝗶𝗯𝗹𝗲 𝗳𝗼𝗿 𝗱𝗲𝗹𝗮𝘆𝘀 𝗼𝗿 𝗱𝗮𝗺𝗮𝗴𝗲𝘀.

Should GST be charged 𝘀𝗲𝗽𝗮𝗿𝗮𝘁𝗲𝗹𝘆 for road and rail? Or is it a 𝗰𝗼𝗺𝗽𝗼𝘀𝗶𝘁𝗲 𝘀𝘂𝗽𝗽𝗹𝘆?

🚀 𝗛𝗲𝗿𝗲’𝘀 𝘁𝗵𝗲 𝗰𝗹𝗮𝗿𝗶𝘁𝘆:

✅ 𝗠𝘂𝗹𝘁𝗶𝗺𝗼𝗱𝗮𝗹 𝗧𝗿𝗮𝗻𝘀𝗽𝗼𝗿𝘁 𝗦𝗲𝗿𝘃𝗶𝗰𝗲𝘀 (𝗦𝗔𝗖 996541) 𝗮𝘁𝘁𝗿𝗮𝗰𝘁 12% 𝗚𝗦𝗧 𝘂𝗻𝗱𝗲𝗿 𝗳𝗼𝗿𝘄𝗮𝗿𝗱 𝗰𝗵𝗮𝗿𝗴𝗲.

✅ This was introduced in 2018 to simplify taxation for logistics using multiple transport modes.

📌 In the 28𝘁𝗵 𝗚𝗦𝗧 𝗖𝗼𝘂𝗻𝗰𝗶𝗹 𝗠𝗲𝗲𝘁𝗶𝗻𝗴 (21.07.2018), it was discussed that:

💡 𝗙𝗶𝗻𝗱𝗶𝗻𝗴 𝗮 𝗱𝗼𝗺𝗶𝗻𝗮𝗻𝘁 𝘁𝗿𝗮𝗻𝘀𝗽𝗼𝗿𝘁 𝗺𝗼𝗱𝗲 𝗶𝘀 𝘁𝗿𝗶𝗰𝗸𝘆
💡 To𝗮𝘃𝗼𝗶𝗱 𝗰𝗼𝗻𝗳𝘂𝘀𝗶𝗼𝗻, a separate 12% 𝗚𝗦𝗧 𝗰𝗮𝘁𝗲𝗴𝗼𝗿𝘆 was introduced.
💡 This was later notified under:
👉𝗡𝗼𝘁𝗶𝗳𝗶𝗰𝗮𝘁𝗶𝗼𝗻 𝗡𝗼. 13/2018-𝗖.𝗧. (𝗥𝗮𝘁𝗲) & 14/2018-𝗜.𝗧. (𝗥𝗮𝘁𝗲) (26.07.2018)

🚨𝗞𝗲𝘆 𝗥𝗶𝘀𝗸𝘀 𝗳𝗼𝗿 𝗦𝘁𝗮𝗿𝘁𝘂𝗽𝘀:

⚠️  GST authorities may still argue that 𝗺𝘂𝗹𝘁𝗶𝗺𝗼𝗱𝗮𝗹 𝘁𝗿𝗮𝗻𝘀𝗽𝗼𝗿𝘁

👉 is 𝗮 𝗰𝗼𝘂𝗿𝗶𝗲𝗿 𝘀𝗲𝗿𝘃𝗶𝗰𝗲 chargeable to GST at 18%. But the 𝗖𝗕𝗜𝗖 𝗖𝗶𝗿𝗰𝘂𝗹𝗮𝗿 𝗡𝗼. 104/7/2008-𝗦.𝗧 clarified that 𝗺𝘂𝗹𝘁𝗶𝗺𝗼𝗱𝗮𝗹 𝘁𝗿𝗮𝗻𝘀𝗽𝗼𝗿𝘁 𝗶𝘀 𝗡𝗢𝗧 𝗰𝗼𝘂𝗿𝗶𝗲𝗿 𝘀𝗲𝗿𝘃𝗶𝗰𝗲. ✅

👉 is chargeable to GST at 18% as any other service – which can be negated based on the aforementioned clarification on 𝗠𝘂𝗹𝘁𝗶𝗺𝗼𝗱𝗮𝗹 𝗧𝗿𝗮𝗻𝘀𝗽𝗼𝗿𝘁 𝗦𝗲𝗿𝘃𝗶𝗰𝗲𝘀

💡 Why do these matters for your startup? Correct GST classification

✅𝗿𝗲𝗱𝘂𝗰𝗲𝘀 𝘁𝗮𝘅 𝗿𝗶𝘀𝗸𝘀

✅ensure less or no haircut to your valuation in the next funding round

✅𝗲𝗻𝘀𝘂𝗿𝗲𝘀 𝘀𝗺𝗼𝗼𝘁𝗵 𝗳𝘂𝗻𝗱𝗶𝗻𝗴

Has GST ever impacted your startup’s operations or funding?