GST on Ocean Freight

[Kaustubh Karandikar]

1) On import of goods, if the value is FOB, the Shipping Line is issuing Invoice for freight to the CHA and ocean freight is paid by the CHA to the Shipping Line and then got reimbursed from importer by issuing invoice and charging GST in it. Can the importer take ITC of the same or he need to pay GST under reverse charge @ 5% of Ocean Freight and then claim ITC?

2) On import of goods, if the value is FOB, the Shipping Line is issuing Invoice for freight to the Importer and ocean freight is paid by the Importer to the Shipping Line. Is importer required to pay 18% GST under reverse charge since 5% is applicable only for Transport of goods in a vessel by a person located in non-taxable territory to a person located in non-taxable territory & importer is not located in non – taxable territory?

[Nandan Khambete]

1) Pay RCM @5% and claim ITC

2) RCM @ 5%

AI Summary

Reverse charge on ocean freight requires importer to pay GST and allows claiming input tax credit. In both FOB import permutations-freight invoiced to the CHA and reimbursed by the importer, or freight invoiced directly to the importer-the importer is required to discharge GST under the reverse charge mechanism at the rate applicable to ocean freight supplied by a person in a non taxable territory, and may subsequently claim input tax credit of that reverse charge GST.