Goods and Services Tax – GST – By: – CA.VINOD CHAURASIA – Dated:- 3-10-2017 Last Replied Date:- 5-12-2017 – GST on Custom House Agents 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%. Hence, 18% GST rate would be applicable for most of the supporting services in transport. Specific Rule Ocean freight Transport of goods in a vessel GST is payable @ 5% with ITC of input services GST on Reverse Charge basis @ 5% to be paid by the importer in case services supplied by a person located in non- taxable territory by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India. If value of ocean freight
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All other services Detention, 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 to overseas client/Agent 0% 18% 3 Transport of goods by Air -Import (Prepaid and collect) Air Freight on Import Custom Clearance Charges Origin EXW charges 0% 18% 18% Where s the Place of Supply of Transportation of goods services under the GST law ? When location of both supplier & recipient is India, the place of supply of transportation of good services as per section 12(8) IGST Act shall be: the location of the recipient, if the recipient is a GST registered
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e. Basis the origin and destination 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 outside India b. Between OA and Indian Freight Forwarder ( Indian FF ) Contract to perform the Indian leg of shipment, on behalf of OA and not the Consignor or Consignee Section 12(8)(b) of IGST Act shall apply *refer note below Ex-Works ( EXW ) ( i.e Entire liability discharged by Consignee/ Buyer) a. Between Consignee and Indian FF Contract for delivery of goods from outside India to factory/warehouse of consignee in India Taxable u/s 12(8) of IGST Act b. Between I
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a b. Between Consignee and Indian 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 India Taxable u/s 12(8) of IGST Act b. Between Indian FF and OA Contract to perform the foreign leg of shipment, on behalf of FF and not on the behalf of the Consignor or Consignee Taxable u/s 13(9) of IGST Act. Tax liability shall be discharged on RCM basis. Ex-Works ( EXW ) ( i.e Entire liability discharged by Consignee/ Buyer) a. Between Consignee and OA Contract for delivery of goods from India to factory/warehouse of consignee outside India Not taxable since both
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ontract for transportation of 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/ocean freight is paid by the OA. Hence, such transaction would be subject to GST. Frequently asked questions 1) What is the rate of tax on export freight when freight is prepaid in India? Ans. 5 %. 2) What is the rate of tax on export freight when it is on collect terms? Ans. Under Sec 13(9) of IGST, this is export of service. So this kind of a transaction is a zero rated supply as per section 16 of IGST Act. 3) What is the rate of tax on THC (Terminal Handling Charges
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Therefore, it would be better 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 shipment then are charges such as THC, B/L Fee, Customs clearance done in India? Will transport in India, etc. be taxable? Am I supposed to charge my overseas agent tax along with the charges? Ans. 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 h
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rate of tax? Ans. Yes, GST is 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 the location of the recipient of service. If the recipient of services is in the same state as you are, you have to charge SGST/CGST if the recipient is in a different state, you have to charge IGST. 14) If I use the services of a GTA, am I supposed to pay GST under reverse charge? At what rate? Can I claim ITC on the tax paid? Ans. Yes, if you use services of GTA for road transport, GST is payable under reverse charge. You can claim the ITC paid after paying the tax t
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, you must have a state wise 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 office throughout the month. Your Mumbai office will get to consume the ITC on invoices raised by service providers in Mumbai for freight, THC, etc. Your Delhi office will get to use the ITC on invoices raised by its Mumbai office, in other words, every branch office in a different state than yours must be treated as a vendor. 19) If I have only one office in Maharashtra, is it mandatory for me to have an office/branch office to handle shipments from let s say Chennai?
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e same service. 21) Is there 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 authorization letter from your customer (once every year) authorising you to customs clearance, transport, pay shipping lines, etc., on their behalf. 21) Are cash expenses, sundry expenses, operations vouchers, sundries paid to operations staff on per job basis, taxable? Are conveyances paid to operations staff to go from one CFS to another CFS taxable? Are labour charges, carting charges, warai charges, loading/unloading charges paid in cash taxable? Is ITC available on t
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