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GST on Custom House Agents

Goods and Services Tax - GST - By: - CA.VINOD CHAURASIA - Dated:- 3-10-2017 Last Replied Date:- 5-12-2017 - Introduction: This article discusses in detail about the GST taxability on Custom house Agents. Customs House Agent means a person licensed, temporarily or otherwise, under the regulations made under sub-section (2) of section 146 of the Customs Act,1962 (52 of 1962); General Rule The default GST rate for services for which specific rate has not been provided by the GST Council is 18%. Hen .....

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mporter then value shall be deemed to be 10% of CIF value of imported Goods. In other Words, GST shall be 5% of Freight or 0.5% of CIF Value. Air freight Services by way of transportation of goods by an aircraft from a place outside India upto the customs station of clearance in India NIL (As per Notification No. 12/2017- Central Tax (Rate), dated 28th June, 2017) GST rates on Ocean Freight Shipments: Sl no Description of Service Charges Covered Rate of Tax 1 Transport of goods in a vessel Prepa .....

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, DO fee, BL fee, Container cleaning, Agency Charges, Clearance charges, EXW charges etc. 18% GST rates on Air shipments: Sl.no. Description of Service Charges Covered Rate of Tax 1 Transport of goods by Air-Export Prepaid Air Freight on exports and related surcharges and all Origin charges including clearance and billed to entity based in India 18% 2 Transport of goods by Air-Export Prepaid Air Freight on exports billed to overseas client/ Agent All Origin charges including clearance and billed .....

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an unregistered person, the place of supply shall be the place where the goods are handed over for transportation. When location of any supplier or recipient is outside India, the place of supply of transportation of good services as per section 13(9) IGST Act shall be: the destination of such goods Practically, all international freight transportation of goods is carried out in association with the associated overseas agents ( OA ) of domestic freight forwarder ( FF )as a part of a global netwo .....

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ination of the transaction, analysis of each transaction from point of view of GST is encapsulated below: Inward Shipments - Shipments Coming Into India INWARD SHIPMENT Type of Shipment Legs of Transactions Scope Taxability Under GST Delivered Duty Paid ( DDP ) (i.e Entire liability discharged by Consignor/ Seller) a. Between Consignor and Overseas Agent ( OA ) Contract for delivery of goods from outside India to factory/ warehouse of consignee in India Not taxable since both parties are located .....

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perform the origin leg of transaction in the foreign country on behalf of FF and not the Consignor or Consignee Taxable u/s 13(9) of IGST Act. Tax liability shall be discharged on RCM basis. Cost- Insurance- Freight ( CIF ) (Liability of Consignor to deliver the goods till Indian port i.e. port of importation) a. Between the Consignor and Foreign Freight Forwarder ( Foreign FF ) Contract to deliver goods till the port of importation (India), including respective clearance and freight charges Not .....

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ndian FF Contract for transportation of goods from foreign port to factory/warehouse of consignee, including clearance and freight charges Taxable u/s 12(8) of IGST Act Outward Shipments - Shipments going Into India OUTWARD SHIPMENT Type of Shipment Legs of Transactions Scope Taxability Under GST Delivered Duty Paid ( DDP ) (i.e Entire liability discharged by Consignor/ Seller) a. Between Consignor and Indian FF Contract for delivery of goods from India to factory/warehouse of consignee outside .....

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India b. Between OA and Indian FF Contract to perform the origin leg of transaction in India on behalf of OA and not the Consignor or Consignee Section 12(8)(b) of IGST Act shall apply *refer note below Cost- Insurance- Freight ( CIF ) (Liability of Consignor to deliver the goods till foreign port i.e. port of importation) a. Between the Consignor and Indian FF Contract to deliver goods till the foreign port of importation, including respective clearance and freight charges Taxable u/s 12(8) of .....

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f goods from Indian port to factory/warehouse of consignee, including clearance and freight charges Not taxable since both parties are located outside India *Note In respect of transaction performed by Indian FF on behalf of OA, the services are provided to a non-resident entity which would be considered as a non-registered entity. Accordingly, the place of supply of service for unregistered entity will be location where the goods are handed over for transportation i.e. India, provided the air/o .....

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es), B/L Fee s, and other origin charges when these charges are prepaid? Ans. 18%. 4) What is the rate of tax on THC, IHC, B/L Fee s, and other origin charges when these charges are on collect terms? Ans. 18% 5) What are the tax rates on any charges that are not specified or where SAC /HSN codes are not present? Ans. 18%. 6) If shipping line charges freight with breakup such as basic freight, BAF (Bunker Adjustment Factor) i.e. , CAF (Currency Adjustment Factor), etc. as a forwarder can we charg .....

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er to show freight and other charges separately. 8) GST is not applicable for export freight collect shipments where freight is collected by my overseas agent at the destination but is GST applicable when I raise my invoice on my overseas agent for freight or for my share of the freight that was due to me? Also, at what rate can it be charged? Ans. No, as per section 13(9) of IGST Act, if the place of supply of service lies outside India, GST is not applicable. 9) If I handle ex-works export shi .....

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n i.e. India, provided the air/ocean freight is paid by the OA. Hence, such transaction would be subject to GST. The government is concerned with revenue, whether you charge your agent and pay or whether you pay out of your pocket it does not matter. As a freight forwarder we have to sensitise our agents to the new taxes, nevertheless, if your overseas agent is reluctant to pay GST, then you have to pay out of your earnings so it s better to incorporate the GST component in your ex-works charges .....

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s applicable on export door delivery charges at the rate of 18% if these charges are paid in India. 12) Is GST applicable on export door delivery shipments if the charges are on a collect basis and collected by my agent overseas? Ans. No, as per IGST rule 13(9), this transaction is not taxable. 13) As a freight forwarder, how should I decide if I should charge IGST or SGST/CGST Ans. The main criteria to decide the applicability of IGST vs SGST/CGST on my invoices raised for Indian customers is t .....

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m not a GTA and provide services of road transport to my customer, what GST should I charge my customer? Ans. 18% 16) If I am not a GTA and provide services of road transport to my customer, can I ask my customer to pay under reverse charge? Ans. No, under such circumstances you cannot ask your customer to pay under reverse charge, it must be under forward charge only. 17) When tax is payable under reverse charge does my tax invoice have to show that customer/recipient of service must pay tax un .....

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registration with separate GSTIN numbers for each state. If you have a full-fledged branch office in Delhi that services Delhi customers then invoices must be raised by your Delhi office for your Delhi customers. Your Mumbai office, in turn, has to raise an invoice on your Delhi office for services supplied by the Mumbai office to the Delhi office. Alternatively, your Mumbai office is free to raise once a month, a consolidated statement for services supplied by the Mumbai office to the Delhi of .....

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nly in one state, it is not mandatory for you to have a branch office in Tamil Nadu to handle shipments from Chennai. Out of your Maharashtra office, you are free to handle shipments out of any location in India. If the shipment is from Chennai but your customer is located in the same state as you are, i.e. Maharashtra then you have to charge SGST/CGST. If the shipment is from Chennai and your customer is located in Tamil Nadu and you are located in Maharashtra then you have to charge IGST. 20) .....

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a concept of pure agent/disbursement under GST regime. Ans. Yes, there is pure agent concept in GST, in the previous example, customs broker must ask the CFS, shipping line, etc. to make the invoice in the name of the importer. Customs broker can pay on behalf of the importer and importer will be able to use the ITC. Since the invoice of the CFS, shipping line, etc., is in the name of the importer, the customs broker cannot claim ITC on this transaction. It is advisable that you obtain an autho .....

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