IGST applicable on freight amount in case of export

[KARAN VERMA]

Sir

I am exporting goods on CIF basis with payment of IGST and charge freight from foreign customer. Now, my question whether GST also applicable on freight amount.

If after paying IGST on freight, whether i am eligible for refund of same tax paid on freight from custom.

[KASTURI SETHI]

As per Rule 96 of CGST Rules, Shipping bill is an application for claiming rebate on account of tax paid on export of goods. Rebate claim will be sanctioned on the basis of value shown in the Shipping Bill. What value has been shown in Shipping Bill ? FOB or CIF ? On the other hand, taxes and duties cannot be exported. There are case laws to this effect.

[Nandan Khambete]

Dear Kasturi Sir, In case of CIF Export, Shipping Bill always has Breakup of CIF i.e. FOB Insurance Freight and total is CIF.

[KASTURI SETHI]

Sh. Nandan Khambete Ji,

Sir, Thanks a lot.

[Kashish Gupta]

Further reference can be made to Circular Number 05/2018-Customs dates 23.02.2018 and to the format of shipping bill wherein GST details are separately to be mentioned.

As per GST law, once goods are supplied on CIF basis, freight also becomes supply of goods on account of "composite supply". Therefore, IGST would be levied on CIF value and exporter is entitled to full refund.

[KASTURI SETHI]

The department allows refund/rebate on FOB value.

AI Summary

IGST on CIF exports: freight treated within composite supply, IGST payable though refund mechanics follow shipping bill treatment. When goods are exported on CIF terms the shipping bill shows a CIF breakup into FOB, insurance and freight and rebate claims are sanctioned on the value shown in the shipping bill under Rule 96. Freight forms part of the composite supply so IGST is leviable on CIF inclusive of freight; GST details must be separately stated in the shipping bill and refund mechanics may result in departmental rebate processing based on FOB value.