GST on Custom House Agents
By: – CA.VINOD CHAURASIA
Goods and Services Tax – GST
Dated:- 29-9-2017<\/p>\n
Introduction: This article discusses in detail about the GST taxability on Custom house Agents.
\nCustoms 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);
\nGeneral Rule
\nThe default GST rate for services for which specific rate has not been provided by the GST Council is 18%.
\n Hence, 18% GST rate would be applicable for most of the supporting services in transport.
\n Specific Rule
\n * Ocean freight
\nTransport of goods in a vessel GST is payable @ 5% with ITC of input services
\nGST 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.
\nIf value of ocean freight is no<\/p>\n
= = = = = = = =<\/p>\n
Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n n carriage (both export\/import shipments) by road = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n aforesaid, it is essential to understand the various legs on transaction involved in providing freight transportation service. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n goods till Foreign port i.e. port of exportation) = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n ee-on- Board ('FOB') (Liability of Consignor to deliver the goods till Indian port i.e. port of exportation) = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n L Fee, etc into freight and show a single head as freight or lump sum freight or all in charges? = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n ome FOB? = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n manent establishment), services customers in Delhi and North India but shipments are from Mumbai, can I choose to not to raise invoices from my Delhi branch on my Delhi customers and instead centralise my billing at my head office in Mumbai? = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n or importer makes payment to the CFS, can this be treated as pure agent concept? Will the importer be allowed to claim ITC? = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n","protected":false},"excerpt":{"rendered":" GST on Custom House AgentsBy: – CA.VINOD CHAURASIAGoods and Services Tax – GSTDated:- 29-9-2017 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); … Continue reading “GST on Custom House Agents”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-7998","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts\/7998","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=7998"}],"version-history":[{"count":0,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts\/7998\/revisions"}],"wp:attachment":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=7998"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=7998"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=7998"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
For full text:-Visit the Source <\/a><\/p>\n
\n 18%
\n 7
\n All other services
\n Detention, DO fee, BL fee, Container cleaning, Agency Charges, Clearance charges, EXW charges etc.
\n 18%
\n GST rates on Air shipments:
\n Sl no
\nDescription of Service
\nCharges Covered
\n Rate of Tax
\n 1
\nTransport of goods by Air-Export
\nPrepaid Air Freight on exports and related surcharges and all Origin charges including clearance and billed to entity based in India
\n 18%
\n 2
\nTransport of goods by Air-Export
\nPrepaid Air Freight on exports billed to overseas client\/ Agent
\nAll Origin charges including clearance and billed to overseas client\/Agent
\n 0%
\n 18%
\n 3
\n Transport of goods by Air -Import
\n(Prepaid and collect)
\n Air Freight on Import
\nCustom Clearance Charges
\nOrigin EXW charges
\n 0%
\n 18%
\n 18%
\nWhere's the Place of Supply of 'Transportation of goods' services under the GST law ?
\n * When location of both supplier & recipient is India, the place of supply of transportation of good services as<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\n Basis the origin and destination of the transaction, analysis of each transaction from point of view of GST is encapsulated below:
\nInward Shipments – Shipments Coming Into India
\nINWARD SHIPMENT
\nType of Shipment
\nLegs of Transactions
\nScope
\nTaxability Under GST
\nDelivered Duty Paid ('DDP') (i.e Entire liability discharged by Consignor\/ Seller)
\na. Between Consignor and Overseas Agent ('OA')
\nContract for delivery of goods from outside India to factory\/ warehouse of consignee in India
\nNot taxable since both parties are located outside India
\nb. Between OA and Indian
\n\tFreight Forwarder
\n\t('Indian FF')
\nContract to perform the Indian leg of shipment, on behalf
\n\tof OA and not the Consignor or
\n\tConsignee
\nSection 12(8)(b) of IGST Act shall apply *refer note below
\nEx-Works ('EXW')
\n\t( i.e Entire liability discharged by Consignee\/
\n\tBuyer)
\na. Between Consig<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\na. Between Consignor and Foreign FF
\nContract to deliver goods till the port of exportation
\nNot taxable since both parties are located outside India
\nb. Between Consignee and Indian FF
\nContract for transportation of
\n\tgoods from foreign port to
\n\tfactory\/warehouse of consignee,
\n\tincluding clearance and freight charges
\nTaxable u\/s 12(8) of IGST Act
\nOutward Shipments – Shipments going Into India
\nOUTWARD SHIPMENT
\nType of Shipment
\nLegs of Transactions
\nScope
\nTaxability Under GST
\nDelivered Duty Paid ('DDP') (i.e Entire liability discharged by Consignor\/ Seller)
\na. Between Consignor and Indian FF
\nContract for delivery of goods from India to factory\/warehouse of consignee outside India
\nTaxable u\/s 12(8) of IGST Act
\nb. Between Indian
\n\tFF and OA
\nContract to perform the foreign leg of shipment, on behalf of FF and
\n\tnot on the behalf of the Consignor or Consignee
\nTaxable u\/s 13(9) of IGST Act. Tax liability shall be discharged<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\na. Between Consignor andIndian FF
\nContract to deliver goods till the port of exportation (India)
\nTaxable u\/s 12(8) of IGST Act
\nb.Between Consignee and Foreign FF
\nContract for transportation of goods from Indian port to
\n\tfactory\/warehouse
\n\tof consignee, including clearance and freight charges
\nNot taxable since both parties are located outside India
\n*Note
\nIn 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.
\nFrequently asked questions
\n1) What is the rate of tax on export freight when freight is prepaid in India?<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nAns. Basic freight is taxable @ 5% & other charges are taxable @ 18% .
\n It may happen to be a case mixed supply as per 8 of CGST Act, So it is not advisable as that tax rate will be 18% in such case.
\n Therefore, it would be better to show freight and other charges separately.
\n8) 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?
\nAns. No, as per section 13(9) of IGST Act, if the place of supply of service lies outside India, GST is not applicable.
\n9) 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 alo<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nAns. Yes, as forwarders speak to your respective associations to find a workable solution and push them to make representations to the government so that situation is reversed.
\n11) Is GST applicable on export door delivery shipments if the charges are prepaid in India by the shipper? What is the rate of tax?
\nAns. Yes, GST is applicable on export door delivery charges at the rate of 18% if these charges are paid in India.
\n12) Is GST applicable on export door delivery shipments if the charges are on a collect basis and collected by my agent overseas?
\nAns. No, as per IGST rule 13(9), this transaction is not taxable.
\n13) As a freight forwarder, how should I decide if I should charge IGST or SGST\/CGST
\nAns. 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 di<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nAns. No, you cannot centralise your billing in your head office or branch office, 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.
\nYour Mumbai office will get to consume the ITC on invoices raised by service providers in Mumbai for freight, THC, etc.\n<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nAns. No, the importer will not be allowed to claim ITC in this situation. If the CFS raises an invoice on the customs broker, then the customs broker, in turn, must raise an invoice on the importer for the same service.
\n21) Is there a concept of pure agent\/disbursement under GST regime.
\nAns. 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.
\nIt 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 beh<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n