TaxTMI 
TaxTMI 
GST ON EXPORT FREIGHT FOR FREIGHT FORWARDERS
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....ST ON EXPORT FREIGHT FOR FREIGHT FORWARDERS<br> Query (Issue) Started By: - Anwar Uddin Dated:- 26-4-2025 Last Reply Date:- 27-4-2025 Goods and Services Tax - GST<br>Got 5 Replies<br>GST<br>Dear Sir/Madam, Under GST regime Ocean Freight Export is taxable @ 5% I need to know if Freight Forwarders buys Ocean Freight @ USD1000 from shipping line & pays GST@5% and sell it to Exporter @ usd1200, @ what GST rate Freight Forwarder should bill to exporter 5% or 18%? Kindly confirm. Best Regards Anwar Reply By YAGAY andSUN: The Reply: This is a common issue under the GST regime involving freight forwarders acting as intermediaries between shipping lines and exporters. Short Answer: If a freight forwarder buys ocean freight from a shipping l....
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....ine and sells it to an exporter as a principal (not as an agent), the GST rate applicable is 5% on the freight value charged to the exporter. However, if the freight forwarder is acting as an agent or providing composite logistics services, then 18% GST may be applicable on the entire service value under the classification of "logistics or freight forwarding services". So the correct GST rate depends on the nature of service being provided and invoiced. Let's break it down: Case 1: Pure Ocean Freight Transaction (Principal-to-Principal Basis) * Freight Forwarder purchases ocean freight from shipping line @ USD 1000 + 5% GST. * Resells ocean freight to exporter @ USD 1200. * No other services provided (like documentation, ware....
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....housing, etc.) GST Rate Applicable = 5% on USD 1200 As per S. No. 9 of Notification No. 8/2017-Integrated Tax (Rate) dated 28th June 2017 - Ocean freight for export is taxed @5% under SAC 9965. Case 2: Composite Logistics or Freight Forwarding Service * Freight forwarder provides multiple services (like booking, documentation, CHA, transportation to port, etc.) * Charges a consolidated price for the logistics solution. GST Rate Applicable = 18% under SAC 9967 It is treated as a composite supply or freight forwarding service, not just ocean freight resale. Important Note: * The GST Council and CBIC have clarified multiple times (including via advance rulings) that: * If freight forwarder acts as a principal, buying and resellin....
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....g ocean freight, GST at 5% applies. * If freight forwarder is providing freight forwarding/logistics services, 18% applies. Conclusion: In your case, if: * The freight forwarder buys ocean freight from a shipping line at USD 1000 + 5% GST, * Then sells it to the exporter at USD 1200, with no other service component, The freight forwarder should charge 5% GST on USD 1200 to the exporter. *** Reply By Anwar Uddin: The Reply: Respected Sir, Shipping line don't bill Ocean freight individually other support services like terminal handling & documentation also bill along with freight, Normal billing format of shipping line & freight forwarders as below: SHIPPING LINE BILLING: OCEAN FREIGHT @ 5% SAC:996521 ORIGIN TERMINAL HANDLI....
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....NG:@ 18% SAC 996711 DOCUMENTATION OR ANY OTHER SERVICE:@18% SAC 996799 FREIGHT FORWARDERS BILLING: OCEAN FREIGHT:@5% OR 18%?? SAC 996521 OR ANY OTHER?? ORIGIN TERMINAL HANDLING@18% DOCUMENTATION @18% SAC SAME AS ABOVE Reply By YAGAY andSUN: The Reply: I will check and revert by tomorrow. Reply By YAGAY andSUN: The Reply: Thanks for the detailed breakdown - you're already covering the key aspects. Let's now zero in on your core question: "When a freight forwarder purchases ocean freight from a shipping line @ USD 1000 + GST 5%, and sells it to the exporter @ USD 1200, what GST rate should apply - 5% or 18%?" ✅ Short Answer: If the freight forwarder is acting as a principal (buying space and reselling), and invoices ....
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...."Ocean Freight" separately, then 5% GST applies on the resale to the exporter under SAC 996521. BUT - if it's a composite supply of logistics services, or the freight forwarder is bundling other services (e.g., documentation, terminal handling), then the entire supply may attract 18% GST under SAC 9967. 🧾 Billing Format & GST Rate Analysis: 📌 1. Shipping Line Billing: Service SAC Code GST Rate Ocean Freight (Export) 996521 5% Terminal Handling Charges 996711 18% Documentation 996799 18% ✔ This is standard and compliant with Notification No. 8/2017-IGST (Rate). 📌 2. Freight Forwarder Billing: Now, you must assess: Scenario A: Separate Line Items (Break-up Provided) If you invoice the fol....
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....lowing separately: Component GST Rate SAC Code Ocean Freight 5% 996521 Origin THC 18% 996711 Documentation/Service Fee 18% 996799 ➡ Allowed: You can charge 5% GST on freight, and 18% on other services. 📝 Condition: You are not bundling these services into one all-inclusive charge. Each is separately identifiable. Scenario B: Bundled/Composite Supply If you charge USD 1200 all-inclusive, covering freight + handling + documentation, without break-up: ➡ Treated as composite supply of logistics service. ➡ 18% GST applicable on entire amount under SAC 9967. ⚠️ CBIC Clarification & Advance Rulings Several Advance Rulings (e.g., in Karnataka and Maharashtra) have held: Forwarders actin....
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....g as agents/commission basis → 18% applies. Forwarders reselling freight without other bundled services → 5% applies. Bundled charges (freight + services without break-up) → 18%. ✅ Conclusion: Case GST Rate SAC Code Forwarder resells ocean freight ONLY 5% 996521 Forwarder adds services, shows break-up 5% (freight) + 18% (others) 996521 + 9967xx Forwarder charges bundled fee 18% 9967xx ✅ You can charge 5% on the USD 1200 only if: You clearly segregate freight from other services. You're not bundling services as "freight forwarding" or "logistics." *** Reply By Anwar Uddin: The Reply: Sir many thanks for your information, can you please send Advance ruling reference with more details thank you....
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