Treatment of Foreign CHA Freight Invoice Entry

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This discussion clarifies the accounting entry for a foreign ocean freight invoice received for goods exported from India to Oman. It confirms that Reverse Charge Mechanism (RCM) on ocean freight is not applicable in this scenario because the goods are being exported, not imported into India. The appropriate accounting entry involves debiting the Ocean Freight Expense account and crediting the Oman party's account.

Ganapat

Ganapat (Querist)
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04 June 2025 If Mr. X Export Of Goods From India To Oman. Mr. X Received Ocean Freight Invoice Of USD. 800 From Mr. Y Which Are Located In Oman. The Freight Invoice Is Without GST. I Have Doubts Which Are Below

1) How To Pass Accounting Entry In Books
2) Can Mr. X Liable To Pay RCM On Ocean Freight.
3) If Mr. X Liable To Pay RCM On Freight Then What Is The RCM Rate ?
4) This Ocean Freight Invoice Treated As Import Of Service ?

Ram Avtar Singh

Ram Avtar Singh (Expert)
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07 June 2025 No, in this case, Mr. X is not liable to pay RCM on ocean freight.
Why?
As per Notification No. 10/2017-IGST (Rate), RCM on ocean freight applies only to import of goods into India where goods are transported by a foreign shipping line.

In your case:

Goods are exported from India to Oman.

So this is not an import of goods.

Hence, RCM is NOT applicable.

Ram Avtar Singh

Ram Avtar Singh (Expert)
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07 June 2025 Ocean Freight Expense A/c Dr. ₹ [INR equivalent of USD 800]
To Mr. Y (Oman Party) A/c ₹ [Same amount]

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Ganapat

Ganapat (Querist)
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10 June 2025 thank you for your valuable answered

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