Value for Exports

[Kaustubh Karandikar]

For Exports on payment of GST & without payment of GST under LUT, whether, the value to be shown on the tax invoice should include freight charges recovered from foreign customer for movement of goods from factory to Port / Airport as well as from Port / Airport to the foreign customer?

[Alkesh Jani]

Sir,

In this regards, on going through Section 15 (2) of CGST Act, 2017, it is evident that all expenses are to be included for arriving at the value of supply, except discount. Therefore, I am of the view that value is to be shown in the Invoices.

Out other experts are requested to offer their comments.

With Regards,

[Alkesh Jani]

Out may please be read as "OUR"

[Ganeshan Kalyani]

In my view it depends on the terms agreed between the parties. If the freight is on account of the customer , then it will form part of the value of the goods. Otherwise not. Thanks.

[KASTURI SETHI]

Dear Sir,

Freight can be shown/charged in the invoice for movement of goods from factory to port and port to buyer's destination in a foreign country. If sale/transaction is based on CIF value the element freight is already included up to buyer's destination and if FOB basis, freight can be charged separately in the tax invoice.

Taxes and duties cannot be exported. As per Section 1(2) of IGST Act, jurisdiction of IGST Act extends to the whole of India. If GST is paid (through electronic ledger account) on the amount of freight incurred from port to the buyer's destination in a foreign country, ITC paid so cannot be encashed.

[Ganeshan Kalyani]

Generally, the freight charges are recovered from the customer. So, the value on the tax invoice shall include the said charges.

AI Summary

Inclusion of freight charges in export invoice value depends on contractual terms and Section 15(2) valuation rules. Freight charged to a foreign buyer is generally includible in the tax invoice value under the valuation principle of Section 15(2) as part of the value of supply, except where contractual terms allocate freight otherwise. Commercial terms matter: CIF embeds freight up to buyer's destination; FOB allows separate freight invoicing. Taxes and duties are not exported; if GST is paid on freight to buyer's destination the related input tax credit cannot be encashed.