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 Applies to CIF Value in Exports; Exporters Can Claim Full Refund Under Rule 96 CGST Rules An individual inquired about the applicability of IGST on freight charges when exporting goods on a CIF basis and whether they are eligible for a refund on the IGST paid on freight. A respondent explained that under Rule 96 of the CGST Rules, the shipping bill serves as an application for a rebate on taxes paid on exports, based on the value shown, either FOB or CIF. Another contributor clarified that in CIF exports, the shipping bill includes a breakdown of costs. It was noted that IGST applies to the CIF value, and exporters can claim a full refund, referencing a specific customs circular.