GST on Packers and Movers?
GST regime starts
From 1st of July 2017,
the new GST regime had started. Finance minister Arun Jaitley declared that
there would be slabs of 5%, 12%, 18%, 28%. Basic tax rate would be 18%, meaning
most of the normal goods which are not to be subsidized or luxury items which
would attract a rate of 28%, would Attract 18% tax. Movers and Packers
logically came under this standard GST rate.
Customer
Complain on Tax rate of Movers and Packers under the new GST Regime
There is a misconception about the movers and packers rate under GST. In
public media forums like Quora you will frequently
see customers grumbling about being fleeced with higher GST rates. They
complain that although the GST rate for movers and packers is a mere 5%, but
many times, they are charged 18%. However, nothing can be further from truth.
What is
the truth then?
What the customers do not mention is that they opted for the total
service of movers and packers.
By total service, we mean uploading the goods in transport vehicles from
the target and then downloading and arranging them at the proper destination.
This will need labor, packing the goods at one point, transporting them to
another point, where they have to be unloaded. When the customer says that he
has used the services of a movers and packers company, obviously he means that
the total shifting including picking up and dropping the goods that have been
done by them. And GST schedule for packers and movers unambiguously state
that whenever household, office or any type of shifting will consist of
separate handling, packing and unpacking of the goods by the consignee company;
it will hereby attract a GST at a flat rate of 18%. 5 % is applicable only when
the transport of the logistics company is solely used.
Where
can you find the GST rates for movers and packers?
I personally like the website GST4U.in. It allows you the facility of inputting a search
word for finding the code and do not bind you to pre-know exact code of the
industry for finding its GST rate. In the primary description field, enter the
string “road transport”. You will find three entries coming under transport
.Now choose the code, which contains the following terms “household and office
furniture”. By this term, you will instantly recognize that this item is meant
for movers and packers. Other terms in the description, e.g. “parcels by
trucks, trailers” will confirm your choice.
Notice the last part of the description for this specific transport item
will have the term “transport parcels by trucks, trailers, man or animal drawn vehicles”. This
term is specifically meant for household items which is used for the last mile
transport in narrow avenues or gallis , which may not allow the entry of trucks
or trailers.
Actual
Circular for the GST rate of Movers and Packers
Now go to the accompanying circular of
the finance ministry, which defines the rate of GST. The circular serial number
is “Notification No. 11/2017-Central Tax (Rates)” dated 28.06.17. Annexure to
notification bears No. 11/2017 –Central tax (Rates) dated 28.06.17.
When you check this circular, under Serial No. 9 & Heading 9965
(Goods Transport Services) go to column –“Description of service”. In this
column under row (iii), you will find the description entry as “Service of
Goods Transport Agency (GTA)” in relation to household goods for personal use.
Alongside, you will find the relevant GST rate. Only those issuing a
consignment note are considered as a GTA. Thus, a consignment note is an
essential condition to be considered as a GTA under GST.
Relevant
Enrollment Code in GST for Movers & Packers
While discussing this, let us have a small primer on what does SAC mean.
After all, you have to enroll yourself for providing any particular service by
choosing its relevant SAC. For example, to be enrolled as Movers and Packers,
you have to enroll yourself under SAC
9965. SAC is the unified code used in GST for identifying a service,
giving it a certain dimension and defining its tax structure.
Please note that business with turnover between 1.5 crore and 5 crores
will have to obtain a two-digit SAC. Businesses having a turnover equal to and
over 5 crores will require a SAC of 4 digits.
Government
has a nice surprise
In the regard of GST for transport companies, we must not forget the
convenience of input credit that is available to these companies. Input Credit
in GST regime means the right to deduct the tax paid during buying the
inventory required for running the business, while paying the tax for the
business output. This facility of input credit deduction for the movers and
packers goes a long way to reduce their actual tax outlay near 12 %.
Another
Cons
Even if the customer opts for insurance, another important plus point to
be noted for packers in GST regime is that the GST rate remains at 18%.
Are you
moving via GST registered business?
To ensure that you are choosing a GST registered transporter, cross
check his GST number. Just like VAT used previously, the company you choose
should have a valid GST number. Any movers and packers company having a valid
GST number will confidently give you a quote on their services.
GST
Rate for Goods Transport Services
Transport of goods by rail
attracts 5% GST with input
tax credit allowed on input services.
Services of goods transport
agency (GTA) in relation to transportation of goods and transportation of
used household goods for personal use attract 5% GST with no input tax credit
allowed.
Transport of goods in a
vessel including services provided or agreed to be provided by a person located
in non-taxable territory to a person located in non-taxable territory by way of
transportation of goods by a vessel from a place outside India up to the
customs station of clearance in India is taxable at 5% GST with input tax
credit of input services. This would be applicable for services relating to import of goods into
India.
Transport of goods in
containers by rail by any person other than Indian Railways attracts 12% GST
rate with full input tax credit.
In case the GST rate for
the services has not been specifically mentioned above, then 18% GST rate
would be applicable with full input tax credit.
Caution –Is the rate you are paying as taxes to the
movers & packers reaching government coffers?
- To ensure that whatever you are
paying in bill as GST charges will actually be deposited in the treasury,
check out the bill structure. When you are paying GST at 18%, your bill
should show the packing and unpacking as a segregated item. If the bill
only shows only the transportation, he will most probably pay 5% tax while
you have pre-imbursed him 18%. In case of 5% tax shown by the movers and
packers company, he will not have the facility of input credit.
- If the movers and packers company
shows your household shifting as “cargo movement”, get alerted band do not
pay 18% tax. Cargo handling means only transportation, does not need
packing and unpacking and hence attracts 5% tax only.
- Go for packer firms where you have
the facility to fill the online forms for getting an online quote first.
You can query about the GST rate if you feel any discrepancy once you get
the online quotation. It will save you heartburn later when you find
yourself being charged 18% rate off GST while you find no clear
distinction between transportation and packing of goods in your bill.
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