GST ON EX-WORKS CHARGES OF IMPORT

Whether a freight forwarder can charge GST on "Ex-Works" (EXW) charges when you have already paid GST on them via your Bill of Entry (BOE) depends on whether the forwarder is providing a distinct service or merely recovering costs.

Key Considerations

• Distinction Between Freight and Ancillary Charges:

  • Freight: Transportation of goods from the foreign supplier's factory to the port of entry.

  • EXW/Handling Charges: These often cover local documentation, handling, terminal charges, or service fees at the point of origin.

• Double Taxation Risk:

  • If you have already paid IGST on the total landed value (which includes "Freight, Insurance, and other charges" as per Customs valuation rules) at the time of filing your Bill of Entry (BOE), paying GST again on the same amounts to the forwarder is essentially double taxation.

  • If the forwarder is issuing an invoice for services they rendered (like agency fees, documentation, or local handling), those are considered independent services, and they are legally allowed to charge GST on their service fee.

When can a forwarder charge GST?

1. As a Service Provider: If the forwarder is charging for their own professional services (e.g., handling fees, agency charges, documentation), they are required to charge 18% GST on these service fees.

2. As a Principal: If they are acting as a principal (hiring and reselling logistics services to you), they may charge GST on the total value of the logistics service they provided.

Why it might be appearing twice

• Valuation Differences: Customs may have included an estimated or "loading" amount for freight/insurance in your BOE to determine the Assessable Value. The forwarder, however, is billing you for the actual cost incurred for their specific scope of work.

• Scope of Supply: It is possible the forwarder is billing for "ancillary services" (e.g., pickup, local terminal handling) that were not part of the freight amount you paid at the port.

Recommended Action

• Check the Invoice Descripttion: Ask the forwarder to provide a detailed break-up of the "EXW charges." Are these "reimbursements" (pure recovery of costs they paid on your behalf) or are they "service fees" for work they performed?

• Review your BOE: Compare the "Freight/Insurance" value declared on your BOE with the forwarder's invoice. If they are charging for the exact same ocean/air freight that was already included in your Customs valuation, you should contest this.

• Request Proof of Payment: If they claim these are "out-of-pocket" expenses being passed on, they should ideally be treated as a pure agent arrangement where they don't charge GST on the reimbursement of actuals, though this is often a point of contention in audits.

Summary: You should not be paying GST twice on the same service. If the charges on the forwarder's invoice are for actual freight already included in your BOE, you should request them to clarify why GST is being applied again. If the charges are for additional handling/documentation services provided by the forwarder, they are legally entitled to charge GST on their service fees.