GST on freight and insurance

[Kaustubh Karandikar]

XYZ supplying goods for export on payment of GST under claim for refund. In the invoice over and above the value of the supply and GST, they also charge freight and insurance from Indian port to the destination outside India. However, while paying GST the amount of freight and insurance is not considered being incurred for movement from port to outside India. Is it correct and if correct under which provisions because the GST authorities are demanding GST on the same.

[Shilpi Jain]

They may be demanding this considering it to be a composite supply. HOwever, this is a revenue neutral situation. Even if payable, it would have been claimed as a refund.

[Ganeshan Kalyani]

The department is correctly claiming the tax on both the component viz freight and insurance as they are composite supply. I agree with the view of the expert.

[YAGAY and SUN]

The rate of Tax on Freight & Insurance would be at par with the rate of tax on goods.

AI Summary

GST on freight and insurance treated as composite supply, attracting the same tax rate as the underlying goods. Freight and insurance charged with export invoices are treated as a composite supply with the goods and thus attract GST at the same rate as the goods; tax authorities may demand GST on these components, but exportors can seek refund of that tax, making the position revenue neutral in practice.