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

GST valuation: incidental freight, insurance and documentation are part of export value, taxed at goods' rate.
Valuation for exported goods under GST is governed by the general valuation regime; incidental expenses incurred before delivery such as freight, insurance and documentation charges ordinarily form part of the value of supply and the tax rate applicable to such charges follows the taxability and rate of the underlying goods. For refund of accumulated ITC under LUT the lower of Shipping Bill (FOB) value and tax invoice value is taken, while refunds of taxes actually paid (IGST paid) require valuation as determined under the statutory valuation provisions.