India exempts ocean freight from GST
ECONOMY & POLICY

India exempts ocean freight from GST

The Indian government has decided to exempt payments for goods imported via ocean freight from the 5% integrated Goods and Services Tax (GST) starting from October 1st. The Finance Ministry has officially notified the changes to the IGST Act concerning the payment of integrated GST on "ocean freight" for imported goods, effectively ending the requirement for importers to pay 5% GST under the Reverse Charge Mechanism. This move aligns with a Supreme Court ruling in the Mohit Minerals case from last year, emphasising the government's position on this matter.

The decision has been applied prospectively, but the industry has been successful in claiming refunds for taxes previously paid in cases where credit was not utilised. In the Mohit Minerals case, the Supreme Court found that imposing a separate levy on Indian importers for the "supply of services" by the shipping line would violate the GST Act, as the importer is already liable to pay IGST for the composite supply, which includes the supply of goods and various services like transportation and insurance in a CIF (Cost Insurance Freight) contract.

The Indian government has decided to exempt payments for goods imported via ocean freight from the 5% integrated Goods and Services Tax (GST) starting from October 1st. The Finance Ministry has officially notified the changes to the IGST Act concerning the payment of integrated GST on ocean freight for imported goods, effectively ending the requirement for importers to pay 5% GST under the Reverse Charge Mechanism. This move aligns with a Supreme Court ruling in the Mohit Minerals case from last year, emphasising the government's position on this matter. The decision has been applied prospectively, but the industry has been successful in claiming refunds for taxes previously paid in cases where credit was not utilised. In the Mohit Minerals case, the Supreme Court found that imposing a separate levy on Indian importers for the supply of services by the shipping line would violate the GST Act, as the importer is already liable to pay IGST for the composite supply, which includes the supply of goods and various services like transportation and insurance in a CIF (Cost Insurance Freight) contract.

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