Frieght and insurance to be included as composite supply

[Sudhir M]

Company adopt a composite GST rate for the total invoice value, or apply separate GST rates for each individual component (i.e., goods, freight, and insurance) in the export invoice

What HSN/SAC code and corresponding GST rate should be applied to the freight and insurance components included in the export invoice under the IGST payment route?

Is the Company eligible to claim a refund of the IGST paid on the freight and insurance components of the export transaction?

[Ganeshan Kalyani]

The GST rate of main item applies to other incident items or services. 

[Shilpi Jain]

Freight and insurance would also be liable @ applicable to the goods. Same HSN as that of the goods to be adopted.

No restriction on freight and transport insurance. Can claim refund as well subject to fulfillment of conditions.

[YAGAY andSUN]

When a company exports goods under the IGST payment route and includes freight and insurance components in the total invoice value, it can adopt a composite GST rate for the entire invoice by treating freight and insurance as part of the value of the goods, provided these are incidental to the supply and included in the price charged. In such cases, the same HSN code and GST rate applicable to the goods should be applied uniformly to the entire invoice value, including freight and insurance, as per the valuation rules under Section 15 of the CGST Act. When invoiced this way, the freight and insurance are treated as part of the principal supply (goods) under the concept of a composite supply. Consequently, the company is eligible to claim a refund of the IGST paid on the full invoice value, including the freight and insurance components, as part of the export of goods with payment of tax under Rule 96 of the CGST Rules, subject to fulfillment of refund conditions such as proper filing of shipping bill, EGM, and GSTR-1. There is no restriction under GST law preventing the inclusion of freight and insurance in the export invoice for refund purposes.

[KASTURI SETHI]

In this scenario, refund on the elements of freight and insurance is admissible, both being an integral part of  export transaction.

AI Summary

Composite supply treatment for freight and insurance allows uniform GST rate and refund eligibility on the full export invoice value. Freight and insurance incidental to exported goods, when included in the invoice price, may be treated as a composite supply with the goods as the principal supply, permitting application of the same HSN classification and GST rate to the entire invoice value; IGST paid on the total invoice, including freight and insurance, is refundable under the IGST payment route subject to compliance with statutory refund conditions and required export documentation.