However, in order to avoid tax being calculated multiple times through the course of the transaction, exemptions are provided on subsequent sales. In the current regime, tax should be levied on both parts of the transaction – on the first sale by Ganesh Traders to Maruthi Traders, and the subsequent sale by Maruthi Traders to Prime Hardwares. In Bill to -Ship to transactions, there is a first sale and a subsequent sale. Current regime: how Bill to – Ship to transactions are taxed This lorry receipt (LR) will enable Prime Hardwares to take the delivery of the goods.īefore we proceed to understand Bill to-Ship to transaction in GST, we will understand how these transactions are taxed under the current regime. Maruthi Traders bills the transaction to Prime Hardwares, and endorses the lorry receipt (goods shipped in a lorry by Ganesh Traders) in favour of Prime Hardwares. Second part of the transaction – between Maruthi Traders and Prime Hardwares: Maruthi Traders is the supplier and Prime Hardwares is the buyer.Accordingly, Ganesh Traders bills the transaction to Maruthi Traders, and as per the instruction, ships the goods to Prime Hardwares in Tamil Nadu. First part of the transaction – between Ganesh Traders and Maruthi Traders: Ganesh Traders is the supplier of ladders and Maruthi Traders is the buyer.Prime Hardwares is a customer of Maruthi Traders. The order is for the supply of 100 aluminium ladders, with an instruction to ship the ladders to Prime Hardwares, located in Tamil Nadu. Ganesh Traders, a dealer in hardware goods, located in Maharashtra receives an order from Maruthi Traders, located in Karnataka. Let us understand ‘Bill to – Ship to’ transactions with an example. Today, Bill to – Ship to transactions are a common occurrence.
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In order to avoid the cascading of multiple taxes through the course of the transaction, the first sale will be taxable, and any subsequent sale during the movement of goods is exempt from tax.
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In the Bill to – Ship to model, the billing and shipping of goods are done to two states and entities.
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SHIP TO AND BILLED TO IN TALLY INVOICE How to Determine the Place of Supply in Case of Bill to-Ship to Transactions