Export of goods on payment of GST

[Kaustubh Karandikar]

In case of export of goods on payment of GST, the value recorded in the GST invoice should normally be the transaction value as determined under section 15 of the CGST Act read with the rules made thereunder.

1) Whether the value should be FOB or CIF?

2) If FOB, whether freight charges from factory to Port and from Port to foreign customer should form part of value?

3) If CIF, whether freight charges from factory to Port and from Port to foreign customer should form part of value?

[Ganeshan Kalyani]

Sir, the value should be FOB.

[Amit Agrawal]

With due respect and in my humble view, even for export of goods on paying of IGST, value needs to be determined u/s 15 of the CGST Act, 2017 read with applicable rules.

And in terms of Section 8 (a), charges recovered (if any) by the supplier towards freight, will be part of value of goods to be exported.

Values as FOB / CIF (under Customs) has no bearing on 'Value' on which supplier is liable to pay IGST while exporting goods, in my humble view.

These are strictly personal views of mine and the same should not be construed as professional advice / suggestion.

[Amit Agrawal]

In support, I wish to rely on the 'Explanation' inserted in sub-rule (4) vide NOTIFICATION NO. 14/2022–Central Tax, dated 5th July, 2022.

This explanation, in my view, proves that FOB value declared in the Shipping Bill or Bill of Export form and the value declared in tax invoice can be different simply because we are dealing with 'Values' in two different acts.

Most importantly, similar explanation was NOT added (and actually, same is now conspicuous by its absence) in rule 96 of the CGST Rules, 2017. And query raised here is covered u/r 96.

These are strictly personal views of mine and the same should not be construed as professional advice / suggestion.

[Amit Agrawal]

*......in sub-rule (4) of rule 89... in first Para of above post at Serial No. 3.

AI Summary

Value for export under GST: supplier recovered freight forms part of taxable value; Customs FOB/CIF not determinative Value for exports on payment of GST is determined under transaction-value rules of the CGST regime; freight charges recovered by the supplier are part of the taxable value, and Customs FOB/CIF labels do not alone fix the GST value since Shipping Bill values and tax invoice values may differ under different statutory schemes.