Valuation for Exports on payment of GST under claim for Refund of IGST paid

[Kaustubh Karandikar]

XYZ is exporting goods either without payment of GST under LUT or on payment of duty under claim for refund of IGST paid. They recover Freight, Insurance and Documentation charges over and above the value of the goods from the foreign buyer by charging the same separately in the Tax Invoice and Commercial Invoice. The freight and insurance are from factory in Maharashtra up to the customer’s place outside India. The terms of the contract can be either FOB or CIF and varies from customer to customer.

1) Whether the value for the purpose of GST should include Freight, Insurance and Documentation charges in case of both FOB and CIF terms of contract?

2) For Documentation Charges whether it can be shown under the tax invoice for goods or a separate service invoice for export needs to be prepared?

3) For Freight, Insurance and Documentation charges, what should be the GST Rate to be applied? Same as for goods supplied or any other rate?

In my view, if the contract is FOB, freight and insurance not to be included in value and only documentation charges to include and in case of CIF contract freight, insurance and documentation charges to include in value. The GST rate for freight, insurance and documentation charges will be what is applicable for the goods. Views of the experts please.

AI Summary

Freight, insurance, and documentation must be included in GST value for FOB exports under Section 15 of CGST Act. A discussion on a forum addressed the valuation of exports under GST when claiming refunds for IGST paid. The main query was whether freight, insurance, and documentation charges should be included in the GST value for FOB and CIF contracts. Participants agreed that under Section 15 of the CGST Act, 2017, these charges should be included in the value of supply. It was noted that the GST rate for these charges should align with the goods supplied. The discussion also touched on the refund process, emphasizing that the FOB value is considered for exports under LUT, while CIF is not relevant for GST valuation.