ITC against Ocean Freight

Hi Bindu,

Regarding ITC on input services related to Ocean Freight charged @ 5% GST on outward supply:

Key points:

1. GST rate on Ocean Freight (on import/export services) is generally 5% without ITC as per Notification No. 10/2017-CT (Rate).

2. If you are charging 5% GST on outward supply of Ocean Freight (i.e., you are the service provider), the input services (like related freight, handling, or other input services) will have GST charged on them as per normal rates.

3. Can ITC be claimed on such input services?

   • Yes, you can claim ITC on input services used for providing taxable output services, even if your outward supply is charged at 5%.

   • However, if the outward supply is exempt or under a special composition scheme where ITC is not allowed, then ITC cannot be claimed.

4. Specifically for Ocean Freight, input services directly attributable to this taxable supply can have ITC claimed subject to the usual ITC rules.

Conclusion:

• If you are providing Ocean Freight services charged at 5% GST (taxable supply), you can claim ITC on input services used to provide this service.

• The 5% GST rate on Ocean Freight is a concessional rate, but ITC is not denied by default on inputs.