Freight and Insurance on Exports

[Kaustubh Karandikar]

XYZ supplying goods for export on payment of GST and then claiming refund of the GST paid. XYZ also recovering Freight and Insurance from the foreign customer. Is XYZ required to show such freight and insurance in the Tax Invoice and charge GST on it?

[Nandan Khambete]

Yes. It will be included in value of Supply. If you are charging IGST on exports, IGST should be charged on this component also. Hope this is shown in Tax invoice.

However, if you go for LUT Exports and go for ITC Refund at Centre Jusrisdiction, there is one funny internal circular as per which they consider only FOB value of Exports as Zero rate supply turnover.

[KASTURI SETHI]

Dear Sh. Nandan Khambete Ji,

Sir, Thanks a lot for enrichment of my knowledge.

AI Summary

Value of supply: freight and insurance charged to foreign buyers form part of export taxable value; IGST applies. Freight and insurance charges recovered from a foreign purchaser form part of the value of supply for exported goods and must be shown in the tax invoice; if IGST is charged on exports, it should be applied to the freight and insurance component. An internal administrative circular is reported to treat only FOB value as zero-rated turnover for exports under LUT when claiming input tax credit refund at the central jurisdiction.