GST on ocean freight

[Kaustubh Karandikar]

XYZ (India) (Freight Forwarder) had paid the amount to a foreign shipping line towards ocean freight in foreign currency. This amount along with mark up was recovered from the importer in India i.e., the client of XYZ who had entrusted the work to XYZ towards transportation of goods by Sea against imports. XYZ charged the importer GST @ 5% under the head ‘Transport of goods in a vessel’(SAC Code 9965). Is it correct?

[Shilpi Jain]

That could be possible since the rate in tax under HSN 9965 is service specific and not service provider specific, that is for being eligible for the 5% rate of GST - the provision of service of transportation of goods in a vessel is sufficient. It is not that only the shipping liners will be eligible for this rate of tax

AI Summary

Foreign Shipping Charges: XYZ Rightly Applies 5% GST for Sea Transport Services Under SAC Code 9965 XYZ, a freight forwarder in India, paid a foreign shipping line for ocean freight in foreign currency. XYZ then charged an importer, their client, a 5% GST under the category 'Transport of goods in a vessel' (SAC Code 9965) for transporting goods by sea. A respondent clarified that this tax rate is applicable based on the service provided, not the service provider, meaning XYZ's application of the 5% GST rate is appropriate since the service involves the transportation of goods in a vessel.