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GST under RCM on Ocean Freight

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Kaustubh Ram Karandikar

Corporate Consultant- Central Excise &am

519 Points Posted on 12 June 2020

In case of GST under reverse charge on ocean freight, for FOB contracts, importer to pay IGST @ 5% as per Sr. No.9(ii) of Notification. No. 8/2017-Integrated Tax (Rate) on freight charges paid to the foreign shipping line. In case of CIF Contracts, importer to pay IGST @ 5% as per Sr. No.9(ii) of Notification. No. 8/2017-Integrated Tax (Rate) on 10% of the CIF value as per Bill of Entry (Without considering the Gujarat High Court decision). Is my understanding correct sir?

Replies (2)

Quick Summary

This discussion clarifies the application of GST under the Reverse Charge Mechanism (RCM) for ocean freight. For FOB contracts, importers must pay IGST at 5% on freight charges paid to foreign shipping lines. For CIF contracts, IGST is also payable at 5%, calculated on 10% of the CIF value, though the Gujarat High Court's Mohit Minerals decision raises questions about potential double taxation.

Hemal Makwana

Designation

771 Points Posted on 12 June 2020

Gujarat High Court decision in case of Mohit Minerals can be referred. In my view No GST payable under RCM in case of CIF contracts due to issue of double taxation whereas GST may be payable under RCM in case of FOB contracts if shipping line is located outside India.