Question

You have been asked to write a report regarding who may receive freight. Analyze FIVE
(5) principal parties to whom freight may be payable, when this would be the case and if there are any exceptions.

Answer 1

Freight:

Freight refers to the amount or charge paid by the company for carriage or transportation of goods by air, land or sea. In simple words we can say that freight is the charge which a company incurs when they are to transfer or transport their goods from one place to another. It is often referred to as transprtation charges for goods. Goods may be transported on freight-prepaid or freight-collect basis: (1) If the freight is paid by the consignor (as under C&F and CIF terms) the goods remain the consignor's property until their delivery is taken by the consignee upon their arrival at the destination, and payment of the consignor's invoice. (2) If freight is paid by the consignee (as under FOB terms) the goods become the consignee's property when handed over to the carrier against a bill of lading. Freight may be charged on the weight or volume of the shipment (depending upon its nature or density) and also varies according to the mode of shipment, such as bulk, break bulk, containerized. It is also called freightage.

The following are few of the Principal Parties who could account Freight Revenue:

• The logistics company who take end-to-end delivery of the goods from supplier to customer.
• The person who acts as an agent for the transportation on behalf of the logistics company.
• The parties who complete the delivery obligation from half way to the end customer.

Freight charges are to be paid to those people who would provide service related to transportation of goods from one place to another. All the parties who provide this service will be paid freight charges irrespective of their nature. But, the payment of tax depends on the type of goods that are transported. The following items are exempt in paying tax on freight:

• Transport of agricultural produce
• Transport of milk, salt, food grains including rice, flour, pulses
• Transport of organic manure
• Transport of newspapers or magazines registered with the Registrar of Newspapers
• Transport of relief materials for victims of natural or man-made disasters, calamities, accidents or mishaps
• Transport of defence or military equipment
• Transport of any goods, where the gross amount charged for transportation for a consignment transported in a single carriage is less than the limit kept by the respective governments.