Packers & movers are a specific kind of business where individuals with transporting needs are served. Moving from one place to another, either because of a job change or for some other reason, can be a hectic task. Besides the transporting expense, getting everything packed and loaded to the vehicle is another tiresome job. This is why Packers and Movers services are there.
After the launch of the GST system in India on July 1, 2017, the tax applicability on moving services has somewhat changed. In this article, we discuss about GST for packers and movers and how the new taxation system impacts this service and customers’ pockets.
GST, or Goods and Services Tax, is an indirect tax system in India, under which there are five tax slabs – 0%, 5%, 12%, 18%, and 28%.
GST Rates on Packers and Movers Services
Like everything else, Packers and Movers services are also taxable under GST. Now, as you can see, this is a mixed service, where movers are transportation services while packers are a labor service. Now, in general, GST rates for packers and movers services are as follows:
GST rate on transportation services
In general GST on transportation services is 5%.
So, if you choose to avail only the transportation (moving) service from a logistic or packers & movers company, GST on transportation would be levied at 5% rate.
GST on transit insurance
For availing insurance services on transit while moving, GST rate on transit insurance is charged at 18%.
GST on Packers and Movers services
If you choose to avail the complete services of a Packers & Movers company, including packing, uploading & downloading and transportation, then you will have to pay 18% GST on the bill.
GST on Cargo Movement
Some packers & movers may offer relocation services as “Cargo movement”. In that case, the GST to be levied on services will be 5%.
Now, the point to note here is that the normal GST rate on packers and movers is 18%, unless you choose to avail only the transport services. This is where things get confusing for most of the consumers out there, as they begin to think that GST on packers & movers is 5%, which is not true.
Packers & Movers is a mixed service, which combines multiple services, including labor services, transportation, etc. This is why the tax rate of 18% has been decided, keeping all the services in mind. If you decide to avail individual services from different service providers, the tax will be levied accordingly. For instance, if you are doing the packing and loading part yourself and only hiring transportation, then you will pay 5% GST on the bill. However, if you are also availing packing, loading, unloading, etc. along with transportation, then the GST to be charged is 18%.
Recommended: GST Impact on Logistics Service Industry in India
I hope this clears things up.
It may also be possible that some logistic companies try to levy 18% GST on transportation/moving services in the name of the above rule. However, make sure that if you’re only using transportation then you have to pay 5% GST. Only packers & movers companies providing complete services can charge 18% GST from their clients.
GST Exemption on Transportation
Transportation of goods where services are not hired from a professional agency such as packers & movers or a logistic company is tax exempt under GST. So, if you are transporting goods from one place to another in a personal vehicle, you need not pay GST to anyone, as you are not levying any service.
Also, transportation via inland waterways is exempted from GST.