We are chartering vessel for bulk cargo import. Vessels may have Indian and Foreign flags.
As an importer and nominating vessel, what tax related compliance we need to take care off.
Is there anything tonnage tax income on our part etc..
Pl guide.
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Ocean transport..Indian and Foreign Flags holding vessel
Replies (1)
| GST treatment differs significantly based on whether the vessel is Indian or foreign-flagged and whether freight is on import or export cargo: 1. Ocean Freight on Exports (Outbound): - Freight charged by Indian shipping lines for export cargo: Zero-rated (export of service) — no GST if conditions of export of service are met - Freight charged by foreign shipping lines for export cargo: Also zero-rated from the Indian exporter's perspective — foreign shipping line is outside India 2. Ocean Freight on Imports (Inbound) — Key Distinction: - Freight by Indian shipping line: The Indian line charges GST @ 5% on freight (under forward charge). The Indian importer can claim ITC if registered - Freight by Foreign shipping line (CIF imports): Under Notification 10/2017-IGST(Rate), the importer of goods is liable to pay IGST on ocean freight under RCM (Reverse Charge Mechanism). However, this RCM on ocean freight on CIF imports was challenged and the Supreme Court in Mohit Minerals Pvt Ltd (2022) struck down the RCM on ocean freight for CIF imports as unconstitutional/beyond IGST Act power - Post-SC ruling: RCM on ocean freight for CIF imports is no longer applicable. CBIC has not yet formally withdrawn the notification but the SC ruling provides full protection 3. FOB Imports: If imported on FOB basis, the Indian importer arranges freight and pays Indian/foreign shipping line directly — GST on freight paid to Indian line is forward charge; freight paid to foreign line may attract IGST under RCM on import of services (Section 5(3) of IGST Act) 4. GST Rate: Ocean freight services attract 5% GST (SAC 9965) 5. ITC: 5% GST paid on freight (whether forward or RCM) is generally available as ITC for the recipient if used for business |
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