The sub-section (2) of section 146 of the Customs Act,1962 (52 of 1962) defines Custom house agents as the persons registered, provisionally or else, to be employed by the licensee to help him in his work as an agent. There are so many confusion regarding the Custom House Agents provisions under GST Regime, so here is the article to solve all the doubts pertaining the same.
Common Rule Under GST For All Service Providers
The GST rate is 18% by defaults for the services which are not defined under the GST Regime and not covered under special rates by GST council. Therefore, the common 18% GST rate is applicable on the assisting services for transportation.
Special Rule Under GST Covering The Specific Services
5% GST For Ocean Freight
In the transportation of goods, GST for ocean freight is levied at 5% rate with ITC(Input Tax Credit) of input services.
In case, if the supplier of the Goods lives in non-taxable area such as by a way of supply and transportation of goods by a territory residing out of India and shipping the goods from there to the customs station of clearance of India, then the GST on reverse charge basis is levied at 5% rate payable by the importer of the Goods.
In case of unavailability of the value of ocean freight goods to the importers, the value should be considered 10% of CIF value (Cost, insurance, and freight value) of the corresponding goods. So, the GST levy will be 5% of GST or 0.5% of CIF value(5% of 10% of CIF value).
Nil GST For Air Freight
According to Notification No. 12/2017- Central Tax (Rate), published on 28.06.2017 and came into effect on 1st July 2017, the way of transportation services for Goods by Aircraft from the territory out of India to Custom station of clearance of India, is subject to put into the nil category of GST.
Applicable GST Rates On Ocean Freight Or Shipment:
| S.No. | Type Of Services | Applicable Charges | GST Tax Rate |
|---|---|---|---|
| 1. | Transport of goods in a vessel via ocean | Prepaid ocean shipment charges on exports | 5% |
| 2. | Transport of goods in a vessel via ocean | Collect ocean shipment charges on exports | 0% |
| 3. | Transport of goods in a vessel via ocean | Prepaid ocean shipment charges on imports | 5%on reverse charge mechanism basis |
| 4. | Transport of goods in a vessel via ocean | Collect ocean shipment charges on imports | 5% |
| 5. | Transport of goods in containers by rail by any person | Inland commercial transport or haulage (both export/import shipments) by rail | 12% |
| 6. | Transport of goods in containers by road | Inland commercial transport or haulage/On carriage (both export/import shipments) by road | 18% |
| 7. | Remaining other services | Container cleaning, Clearance charges, Detention, BL fee,, Agency Charges, DO fee, EXW charges and other charges | 18% |
Applicable GST Rates On Air Freight Or Shipment
| S. No. | Type Of Services | Applicable Charges | GST Tax Rate |
|---|---|---|---|
| 1. | Transport of goods via Air-export | Prepaid Air charges on exports and corresponding charges pertaining to clearance and billed to entity (based in India) | 18% |
| 2. | Transport of goods via Air-export | Prepaid Air charges on exports billed to overseas client/Agent | 0% |
| All basic charges pertaining to clearance and billed to entity (oversea based) | 18% | ||
| 3. | Transport of goods via Air-import (including prepaid and collect) | Air freight on import | 0% |
| Custom clearance charges | 18% | ||
| Origin EXW charges | 18% |
Place Of Supply Of ‘Transportation Of Goods’ Services:
Case 1: Supplier and recipient both residing in India, the place of supply of services of transportation of Goods will be applicable according to the section 12(8) IGST Act:
- If the recipient is registered under GST, then address of recipient will be considerable
- If the recipient is not registered under GST, then the considerable address will be the address where the goods are assigned to the recipient for transportation
Case 2: Anyone from supplier and recipient residing out of the India, the place of supply of services of transportation of Goods will be applicable according to the section 13(9) IGST Act:
- The targeted location of such goods
Generally, all international level transportation of such goods is taken place in collaboration with the associated overseas agents of domestic freight forwarder (‘FF’) being an associate of an international network.
The overseas agents and freight forwarder work hand-in-hand in providing the last resort services to each other in transporting the goods to a particular country.
The corresponding services providers deal to raise invoices and share the profit. The services provider entity raises the invoice to the recipient of services and charges for services delivery according to a pre-decided percentage of profit margin accordingly.
The procedure involved in delivering freight transportation service has so many legs on a transaction which needs to understand. On the basis of origin and destination location of the transportation process, each transaction is mentioned in below table:
Inward Shipments Which Are Coming Towards India
| S. No. | Shipment types | Legs of transaction in transportation | Range | Applicable GST |
|---|---|---|---|---|
| 1. | Delivered Duty Paid (‘DDP’) (such as all liability discharged by Consignor or Seller) | a. Between a Consignor and Indian FF | Contract for delivery of goods from India to factory or warehouse of consignee out of India | Taxable under section 12(8) of IGST Act |
| b. Between an Indian FF and an OA | Contract to perform the foreign leg of shipment, on behalf of FF and not on the behalf of the a Consignor or a Consignee | Taxable under section 13(9) of IGST Act. and place of supply for unregistered will be location of handover place of transportation | ||
| 2. | Ex-Works (‘EXW’) (such as all liability discharged by a Consignee or a Buyer) | a. Between a Consignee and an Indian FF | Contract for delivery of goods out of India to factory or warehouse of a consignee in India | Section 12(8) of IGST Act |
| b. Between an OA and an Indian FF | origin leg of transaction in India on behalf of an OA and not a Consignor or a Consignee | IGST Act. Tax liability shall be discharged on RCM basis | ||
| 3. | CIF (Liability of a Consignor to deliver the goods till foreign port that is port of importation | a. Between the a Consignor and an Foreign FF | Contract to deliver the goods till the port of importation (foreign), including respective clearance and freight charges | No applicable tax as both parties are located out of the India |
| b. Between a Consignee and a Indian FF | Contract for delivery of goods in India to factory or warehouse of a consignee out of India | Taxable under section 12(8) of IGST Act | ||
| 4. | Free-on- Board (‘FOB’) (Liability of a Consignor to handover the goods till Indian port that is port of exportation) | Between a Consignor and an foreign FF | Contract to deliver the goods till the Indian port of exportation | No applicable tax as both parties are located out of the India |
| b. Between a Consignee and a Foreign FF | An Agreement regarding transportation of the goods from an foreign port to the factory or warehouse of a consignee which also includes respective clearance and freight charges | Taxable under section 12(8) of IGST Act |
Outward Shipments Which Are Going Out Of India
| S. No. | Shipment types | Legs of transaction in transportation | Range | Applicable GST |
| 1. | Delivered Duty Paid (‘DDP’) (such as all liability discharged by Consignor or Seller) | a. Between a Consignor and OA | Contract for delivery of goods from out of India to factory or warehouse of a consignee in India | No applicable tax as both parties are located out of the India |
| b. Between an Indian FF and an OA | Contract to perform the foreign leg of shipment, on behalf of OA and not on the behalf of a Consignor or a Consignee | Taxable under section 12(8) of IGST Act. Tax liability shall be discharged on RCM basis | ||
| 2. | Ex-Works (‘EXW’) (such as all liability discharged by a Consignee or a Buyer) | a. Between a Consignee and an OA | Contract for delivery of goods from India to factory or warehouse of a consignee out of India | No applicable tax as both parties are located out of the India |
| b. Between an OA and an Indian FF | Contract to perform the origin leg of transaction in India on behalf of an OA and not a Consignor or a Consignee | Section 12(8)(b) of IGST Act shall apply, and place of supply for unregistered will be location of handover place of transportation | ||
| 3. | CIF (Liability of a Consignor to deliver the goods till foreign port that is port of importation | a. Between the a Consignor and an Indian FF | Contract to deliver the goods till the port of importation(foreign), including respective clearance and freight charges | Taxable under section 12(8) of IGST Act |
| b. Between a Consignee and a Foreign FF | An agreement for transportation of the goods from a foreign port to the factory or warehouse of a consignee | No applicable tax as both parties are located out of the India | ||
| 4. | Free-on- Board (‘FOB’) (Liability of a Consignor to handover the goods till Indian port that is port of exportation) | Between the a Consignor and an Indian FF | Contract to deliver the goods till the Indian port of importation | Taxable under section 12(8) of IGST Act |
| b. Between a Consignee and a Foreign FF | An Agreement regarding transportation of the goods from an Indian port to the factory or warehouse of a consignee which also includes respective clearance and freight charges | No applicable tax as both parties are located out of the India |
Dear Sir/Ma’am,
Whether mixed Supply provision will apply to CHA agents while issuing invoices to the customers because CHA agents provide various services @ 18% and 5% too. So does CHA agent can generate a single invoice with different GST rates or have to make different invoices
Dear Sir,
Our company is a C&F Agent. We are raising the Air/Ocean freight bill to Overseas Agent in Foreign Currency without GST. But we are paying the Air/Sea freight with GST to our Vendor.
In that situation, we are taking GST input Credit or GST refund Claim. Please Clarify.
As you are only dealing in export of services, so you can claim the refund of ITC available to you.