Why Is There Confusion Between 5% and 18% GST?
One of the most frequently asked questions by homeowners and corporate HR departments in India is: "Why did one relocation company quote 5% GST while another quoted 18% GST for the exact same move?"
The answer lies in the **legal definition of the service** under the Central Goods and Services Tax (CGST) Act. The Goods and Services Tax Council categorizes relocation under two distinct models based on whether you are buying pure transport or a composite turnkey service.
Goods Transport Agency (GTA)
Applies to: Pure freight / truck rental without packing labor.
- You pack your own boxes with your own material.
- You hire only the truck, driver, and transit bilty.
- The transporter cannot claim Input Tax Credit (ITC).
- Tax is collected under SAC Code 9965 (Goods Transport).
- Often paid under Reverse Charge Mechanism (RCM) by registered entities.
Composite Relocation Service
Applies to: Full turnkey packing, loading, transport & unpacking.
- Professional team provides 4-layer packing materials.
- Trained crews handle heavy lifting, loading & dismantling.
- Dedicated closed container transit + door-to-door unpacking.
- Treated as a single composite bundled service under GST.
- 100% Input Tax Credit (ITC) eligible for registered businesses.
Official SAC Codes for Moving Services
Under the GST regime, services are classified using Services Accounting Code (SAC). When receiving a bill from First Choice or any logistics provider, look for these standard codes:
| SAC Code | Service Description | Applicable GST | ITC Eligibility |
|---|---|---|---|
| 996511 | Road transport services of goods by freight container truck (GTA) | 5% (without ITC) or 12% (with ITC) | No ITC under 5% / Yes under 12% |
| 996791 | Freight forwarding, cargo handling, packing and unpacking services | 18% | Yes (Full ITC Allowed) |
| 997139 | Marine / Transit Cargo Insurance for Household Goods | 18% | Yes (For business cargo) |
Can Businesses Claim Input Tax Credit (ITC)?
Yes, 100%! If your organization is relocating its corporate office, shifting an IT server bank, or paying for executive employee relocation, the 18% GST charged on the bill is fully creditable against your company's outward GST liabilities.
To ensure smooth ITC clearance under Section 16 of the CGST Act, make sure:
- The Tax Invoice explicitly shows your company's legal registered name and active 15-digit GSTIN.
- The invoice reflects in your company's **GSTR-2B** statement before filing monthly returns.
- Payment is remitted through banking channels (NEFT, RTGS, or corporate credit card), not personal cash.
Sample GST Shifting Bill Breakdown (2 BHK Home Relocation)
Beware of GST Fraud: 3 Red Flags to Avoid
Fly-by-night movers and fraudulent aggregators frequently lure clients with deceptive pricing by misrepresenting GST rules:
- The Fake GSTIN Trick: Some local operators print an arbitrary 15-digit number on their letterhead. Always verify any GSTIN on the government portal (
services.gst.gov.in). If the trade status says "Cancelled" or belongs to a grocery store, cancel the booking immediately. - The Delivery-Day GST Surprise: An unverified mover will verbally promise an all-inclusive price, then suddenly demand an extra 18% or 28% cash at the destination before opening the truck doors.
- Cash Discounts Without Bills: Operating without a valid GST tax invoice completely nullifies your transit insurance and leaves you with zero legal recourse in Consumer Court or police forums if your goods are stolen or held hostage.
Frequently Asked Questions About GST on Packers and Movers
Is GST compulsory on packers and movers services in India?
Yes. All registered logistics and relocation companies with an annual turnover exceeding statutory thresholds (₹20/40 Lakhs) must issue formal GST tax invoices on every domestic consignment.
What is the difference between CGST, SGST, and IGST on a moving bill?
For moves within the same state (e.g. Gurgaon to Faridabad), the 18% tax is split into 9% CGST (Central) and 9% SGST (State). For moves between two different states (e.g. Gurgaon to Dehradun or Jaipur), a single 18% IGST (Integrated GST) is charged.
Can government or bank employees claim shifting allowance on 5% vs 18% GST?
Public sector banks (SBI, PNB) and defence audits (CDA/PAO) mandate 18% GST composite bills with IBA approval codes for full claim reimbursement. A 5% transport bill often requires tedious individual justification for packing labor.
Need an Audited, 100% GST-Compliant Moving Quotation?
First Choice Packers and Movers provides itemized GST tax invoices, numbered Bilty consignment notes, and IBA-approved documentation recognized by all Indian corporates, banks, and defence authorities.