Goods and Services Tax (GST)

  • Goods and Services Tax (GST)

Frequently Asked Questions

1. What is Goods and Services Tax? How does GST work? When is GST applicable?

GST is a dual tax levied by both central and state governments on the supply of goods and services. GST has been implemented across 29 states and 7 union territories, and has replaced the multiple central and state taxes.

All businesses in India are required to register and migrate to the GST structure.

2. Which taxes presently levied at the Centre and State level will be replaced by GST?

GST will replace the following taxes which are currently levied:

Taxes to be included in GST

Taxes not to be included in GST

Central taxes

Central Excise Duty

Basic Customs Duty

Additional Duties of Excise (Goods of Special Importance)

 

Additional Duties of Excise (Textiles and Textile Products)

 

Duties of Excise (Medicinal and Toilet Preparations)

 

Additional Customs Duty (CVD)

 

Special Additional Duty (SAD)

 

Service Tax

 

Central Sales Tax

 

Surcharge and cess

 

State taxes

Value Added Tax

Stamp Duty

Purchase tax

State Excise Duty

Entry Tax, Octroi, Local Body Tax

Professional Tax

Entertainment and Amusement Tax (except when levied by the local bodies)

Motor Vehicle Tax

Luxury Tax

Electricity Duty

Taxes on lotteries, betting and gambling

State levies on petroleum products

State Surcharge and cess related to the supply of goods and services

 

 

3. What are the various types of taxes under GST?

The government of India has identified three models of GST, depending on whether the centre or the states/union territories are allowed to collect revenue from taxation.

  1. Central GST (CGST) – Tax to be levied by the Centre on intra-state supply of goods and services
  2. State GST (SGST)/Union Territory GST (UTGST) – Tax to be levied by the States/Union Territories on intra-state supply of goods and services
  3. Integrated GST (IGST) – Tax to be levied by Centre on inter-state supply of goods and services, and on imports

4. What will be the various rates of GST?

For goods, a tax structure of four types of rates has been finalized by the government:

 

Particulars

Rate

Nil rated goods

0%

Lower rate (items of mass consumption)

5%

Standard rate

12% or 18%

Higher rate (demerit goods)

28% plus cess

5. Is State GST/Union Territory GST applicable in all the states/union territories across India?

SGST is applicable in all states across India. UTGST is applicable in:

  1. Andaman and Nicobar Islands
  2. Chandigarh
  3. Dadra and Nagar Haveli
  4. Daman and Diu
  5. Lakshadweep

Delhi and Pondicherry have State Legislatures and will be treated as states under GST law. The applicable GST on local transactions within Delhi and Pondicherry will be CGST and SGST.

6. How can I determine the nature of GST that is applicable on goods/service?

The nature of tax i.e. whether CGST + SGST / UTGST or IGST depends on whether the transaction is inter-state supply or an intra-state supply.

If the service provider and the place of supply are in the same state, it will be intra-state supply and local CGST and SGST / UTGST will be applicable.

However, if the service provider and the place of supply are in different states, IGST will be applicable as the transaction is in the nature of an inter-state supply.

Description

Nature of transaction

Taxes applicable

Service provider and place of supply are in same state

Intra-state supply

CGST + SGST

Service provider and place of supply are in same union territory

Intra-state supply

CGST + UTGST

Service provider and place of supply are in different states/ union territories

Inter-state supply

IGST

7. How will imports be taxed under GST? What are the duties payable on imports? Who is liable to pay such taxes?

Integrated GST (IGST) and Basic Customs Duty (BCD) are applicable on the import of goods. The duties payable on import of goods under GST include:

  1. education cess on the Basic Customs Duty paid
  2. safeguard duties and anti-dumping duties

IGST on the import of goods will be payable by the importer of goods or by a person authorized to pay the duty on behalf of the importer.

8. How is GST different from the previous tax system in India?

In the previous tax system, service tax was paid to the Central Government for all services, irrespective of the state in which the services are provided.

Under the GST, services will be assessed and taxed by both Central and State Governments and paid by the service provider in the state in which the services are offered. The GST for specific goods and/or services have now been standardized across all states in India.

9. Can I operate in multiple states with a centralized GST registration?

No. Since the services will be taxed at a state level, all relevant compliance i.e. registrations, returns, refunds etc. must be undertaken at the state level for supply of services. You will have to obtain separate registration for each state where you have a place of business.

10. What are the applicable GST rates for services provided by FedEx Express?

For services provided by FedEx Express, the applicable GST rates are:


Services provided by FedEx

GST Rate

Courier services

18%

Goods Transport Agency Services
(payable by the recipient under reverse charge)

5%

Warehousing services

18%

Customs clearance

18%

11. Given that GST is levied both by the Central and State Governments, how is it calculated?

GST is calculated based on the location from where FedEx Express provides the service and the place of supply denoting the location, from where you have availed the service.

12. Are the services provided by FedEx subject to any exemption under GST?

Some services provided by FedEx which are exempted under GST include:

  • Transportation of goods by road other than by way of goods transport agency services or courier agency services.
  • As a goods transport agency, by way of transport in a goods carriage of:
    • agricultural produce
    • goods where gross amount charged for the transportation of goods on a consignment transported in a single carriage does not exceed INR 1,500
    • goods where gross amount charged for transportation of all such goods for a single consignee does not exceed INR 750
    • milk, salt and food grain including flour, pulses and rice
    • organic manure
    • newspaper or magazines registered with the Registrar of Newspapers
    • relief materials meant for victims of natural or man-made disasters, calamities, accidents or mishap
    • defense or military equipment
    • Loading, unloading, packing, storage or warehousing of rice.

In addition to the above, FedEx will not charge GST on invoices issued for services provided to entities located in Special Economic Zones (SEZ).

13. How is the FedEx location and the place of supply determined for all freight transactions?

The ‘Bill to Pay’ option selected when you update the Air Waybill (AWB) and the type of transaction (Domestic, International, Freight /Duty) determines the FedEx location and the place of supply.

14. How is the FedEx location and place of supply determined for Duty and Advanced fee transactions for international shipments?

  • For import shipments, the location of clearance is the FedEx location on the invoice and the place of supply is either the destination location or the payer state, depending on the ‘Bill to’ option selected on the Air Way Bill.
  • For export shipments, the state in which the shipment has been picked up i.e the origin is the FedEx location on the invoice and the place of supply is either the origin location or the payer state, depending on the ’Bill to’ option selected on the Air Waybill.

15. How do I determine whether I should select ‘Shipper’ or ‘Consignee’ or ‘Third Party/Other Party’ on the Air Waybill for a freight transaction?

  • If you are located at the place from where the pick – up is done, then you should select ‘Shipper’ on the Air Waybill.
  • If you are located at the place from where the delivery is done, then you should select ‘Consignee on the Air Waybill.
  • You can select ‘Third Party/Other Party’ on the Air Waybill in the following cases:
    • If you are neither the shipper nor the consignee
    • If you are neither located at the place of pick-up nor the place of delivery

16. Which FedEx account number should I use for a freight transaction?

The account number used must be aligned to the ‘Bill to Pay’ option selected on the Air Waybill

  • ‘Bill to Shipper’ transactions - Use the account number that belongs to the origin state of the shipment
  • ‘Bill to Consignee’ transactions - Use the account number that belongs to the destination state of the shipment
  • ‘Bill to Third party’ transactions - Use the account number that neither belong to Origin nor the delivery state

17. If I have a ‘Shipper’ account with FedEx Express, can I automate shipments using the ‘Bill Consignee’ or ‘Bill Third Party’ option?

Yes, you can automate your shipments. Please use the ‘Dummy Account Number’ in the shipper field l and populate the Consignee/ Third party account number in the payer field when updating the automated Air Waybill.

18. I have a FedEx account. What tax will be applicable to me if I approach a FedEx retail outlet to hand-over a shipment?

The applicable tax is determined as per GST law for registered or unregistered customer, as the case may be. You must provide the relevant FedEx account number at the retail outlet, on which the invoice will be issued.

19. My employees drop off shipments at a FedEx retail location, for shipping from a state where I do not have an office. How will FedEx send me an invoice?

Please ensure that the employee provides your FedEx account number at the retail counter. If the account is GST registered and updated in the FedEx database, then FedEx will charge you IGST on the shipment. You can avail input tax credit on such invoice. However, if you are not registered under GST, FedEx will charge CGST + SGST / UTGST as applicable in the location of handover of the shipment. It is advisable that you issue some verification document to your employees/representatives who will hand over the shipment at the FedEx retail outlet, authorizing them to provide your customer account number to FedEx for billing purposes.

20. I have scheduled a pickup/delivery from an office which is not registered under GST. However, I have registered other offices across the country under GST. What tax is applicable on my shipment?

If you are yet to obtain GST registration in any state, the premises in such state where FedEx picks up/delivers shipments shall be treated as unregistered premises as per the GST law. FedEx will consider you as an unregistered customer, and you will not be able to avail input tax credit of such invoices.

21. What are the various taxes applicable on my freight transactions?

The taxes applicable on your freight transactions depends on the nature of the transaction.

 

What are the various taxes applicable on my freight transactions?

22. Will I be charged the Integrated Goods and Services Tax (IGST) if I am located in a Special Economic Zone (SEZ)?

No, FedEx will be currently extending a waiver on the GST for these shipments, as per the current GST requirements.

23. How will FedEx generate an invoice, if my GST Identification Number (GSTIN) or Unique Identification Number (UIN) is not available?

FedEx will treat such customers as unregistered customers for the specified state.

24. I have a FedEx shipping account for my import shipments. FedEx pays the customs duty on my behalf and then bills it back to me. Will GST be applicable on the customs duty?

No, the customs duty that FedEx pays on your behalf is not subject to GST. However, the advancement fees shall be subject to GST.

25. How will FedEx issue me a credit note?

FedEx will issue a credit note in the following circumstances:

 

  • taxable value or tax charged on a tax invoice is found to exceed the actual taxable value or tax payable in respect of the supply
  • services are found to be deficient

 

Please note that FedEx will issue the credit note by September 30th of the following financial year or the date of filing of the annual return, whichever is earlier.

26. Am I required to pay tax under reverse charge with respect to any of the supply made by FedEx?

Goods Transport Agency services provided by FedEx will be subject to payment of tax under reverse charge at the rate of five per cent. The invoice raised by FedEx will have a notation stating that the supply is subject to payment of tax under reverse charge.

27. I have received a credit note from FedEx. When should I declare the details of the credit note in my returns?

You will have to disclose the details of the credit note in the period in which the credit note was issued. You must reverse the input tax credit for the difference in amount. In cases where credit notes are issued by FedEx on account of any of the aforementioned reasons, resulting in a reduction of tax liability, you are required to reduce your claim of input tax credit to that extent so that FedEx can make appropriate tax adjustments.

28. When does the liability to pay tax on supply of services arise under reverse charge mechanism?

The liability to pay tax on supply of services under reverse charge mechanism will arise at the time of supply of services, which is earlier of:

  1. date of payment as per the books of account of the recipient or date on which payment is debited in the bank account, whichever is earlier
  2. date after 60 days from the date of invoice
  3. date of entry in the books of account of the recipient, if the same could not be determined as per the above points i and ii

29. Will I be allowed to take credit on GST paid for services provided by FedEx?

Yes, you are eligible for credit on GST paid for services provided by FedEx, provided it is used or intended to be used by you in the course or expansion of your business.

30. What happens where the details of inward supplies furnished by the recipient do not match with the outward supply details furnished by the supplier in his valid return?

In case of any mismatch, the details will be shared with FedEx and you. If the mismatch is not rectified by FedEx, then the amount will be added to the output liability of recipient in the returns for the month succeeding the month in which discrepancy is communicated. You are required to pay the applicable interest in the interim.

However, the output liability will be reduced once FedEx rectifies such discrepancy and the interest amount will be refunded.

31. How will I avail credit for IGST paid on import of goods?

Credit will be available to you on the basis of the Bill of Entry filed on the import of goods.

32. When can a registered taxable individual/entity avail credit on the taxes paid for inward supplies of services?

A registered taxable person/entity shall be entitled to avail credit of any input tax in respect of a supply of services provided, if the:

  1. individual/entity is in possession of a tax invoice or debit note issued by a supplier registered under GST or such other tax paying documents as may be prescribed.
  2. individual/entity has received the services
  3. tax charged in respect of such supply has been actually paid to the Government
  4. individual/entity has furnished the return as prescribed under the law

33. Who do I contact if I have any additional questions?

In case of any additional questions, please contact your FedEx Express Account Sales Manager or write to India@fedex.com.