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

Service-specific GST rate allows a freight forwarder to apply the reduced sea-transport rate when billing importers for ocean freight. The concessional GST rate applies to the service of transportation of goods in a vessel and is service-specific rather than provider-specific; therefore a freight forwarder who pays ocean freight to a foreign shipping line, recovers that cost with markup from the importer, and invoices the importer for the transportation service may apply the reduced GST rate applicable to sea transport where the supply qualifies as transport of goods in a vessel.