GST on ocean freight after october

Regarding the GST treatment of ocean freight after October 1, 2022, the rules depend on whether the shipment involves export or import transactions.

1. Export Ocean Freight

• Status Change: The GST exemption for export-related ocean freight, which was in effect until September 30, 2022, was not extended.

• Taxability: As of October 1, 2022, export ocean freight became taxable under the Forward Charge Mechanism (FCM).

• GST Rates:

  • 5% GST (without Input Tax Credit).

  • 18% GST (with the ability to claim Input Tax Credit).

• Action: Shipping lines or freight forwarders now charge GST on their invoices for export freight. You should not make an RCM entry for these services; instead, treat the GST paid as input tax (if eligible) and ensure the shipping line provides a proper GST invoice.

2. Import Ocean Freight

• Background: The Supreme Court’s judgment in the Mohit Minerals case clarified that an Indian importer is not liable to pay IGST on ocean freight under the Reverse Charge Mechanism (RCM) for CIF (Cost, Insurance, and Freight) contracts, as it led to double taxation.

• Current Status: Following this, the government issued notifications (effective October 1, 2023) that formally removed the RCM liability on ocean freight for imported goods.

• Action: You are generally not required to pay RCM on ocean freight for imports. IGST on imported goods is typically discharged as part of the customs duty calculation.

Summary for your records:

• For Exports: The exemption ended on September 30, 2022. You should receive a taxable invoice from the shipping line (FCM) and claim the Input Tax Credit if you opt for the 18% rate. Do not use RCM.

• For Imports: RCM on ocean freight is no longer applicable.

Disclaimer: GST laws can be complex and subject to specific contract terms. It is recommended to consult with your tax advisor or Chartered Accountant to review your specific invoices and shipping arrangements.