Export Freight for transportation of goods to a place outside India impact of omitting after and before under section 12(8) and section 13(9) of the IGST Act (Budget 2023-24).
Finding the Supplying Place of Services
In comparison to the place of supply of goods finding the place of supply of service is harder since the services are intangible. Rule to find out the place of supply of services is essential to draw uniformity.
The principle of destination-based consumption tax would be the directing factor for finding the place of supply of services beneath different prerequisites.
Therefore the place of supply in general is fixed at the place in which the services would be destined (not simpler to perform).
Sections 12 and 13 of the Integrated Goods and Service Tax Act furnishes the rules for selecting the “Place of Supply” of services.
Section 12 specifies the rules to determine the place of supply of services where:
Both Locations of Supplier of Service & Recipient of Service. are in INDIA
Section 13 furnishes the rules to find out the place of supply of services where:
Location of either of Supplier of Service OR Recipient of Service. is outside INDIA
In this, we shall find out the effect of omitting section 12(8) and section 13(9) of the Integrated Goods and Services Tax referred to as “Freight for Transportation of Goods to a place outside India”
Skipping GST Section 12(8) Under IGST on Freight for Goods’ Transportation Outside India
Prior to Omitting GST Section 12(8)-
- The service provider along with the service recipient both are located in India.
- The transpiration of goods would have been located outside India.
- Under section 12(8) of the IGST act the transactions covered beneath the particular statute.
- The place of supply acknowledged the destination of goods “Other Territory” & “IGST” was levied on the freight for the transportation of goods to the place outside India despite when the service recipient and service providers would be enrolled in the identical state.
After Skipping GST Section 12(8) Under IGST, Supplying Place will be Identified Under Section 12(2) of IGST Act
- When the recipient would be the registered individual, POS is the location of the recipient service.
- When the recipient would not the registered individual and the address of the recipient exists on the record, the recipient’s location is POS.
- POS is the supplier’s location for the event when the address of the recipient does not exist on the record.
According to the below-mentioned table, CGST/SGST/IGST shall be levied on the freight for the goods transportation to the place outside India.
| Proper Address of Service Recipient | Service Provider Proper Address | Accurate Place of Supply | CGST Applicability | SGST | IGST |
|---|---|---|---|---|---|
| Maharashtra (Registered Under GST) | Maharashtra | Maharashtra | Applicable | Applicable | Not Applicable |
| Maharashtra (Registered Under GST) | Delhi | Maharashtra | Not Applicable | Not Applicable | Applicable |
| Maharashtra (Un-Registered GST Dealer, address available) | Maharashtra | Maharashtra | Applicable | Applicable | Not Applicable |
| Maharashtra (Un-Registered GST Dealer, address available) | Delhi | Maharashtra | Not Applicable | Not Applicable | Applicable |
| Maharashtra (Un-Registered GST Dealer, address available) | Maharashtra | Maharashtra | Applicable | Applicable | Not Applicable |
| Maharashtra (Un-Registered GST Dealer, address available) | Delhi | Delhi | Not Applicable | Not Applicable | Applicable |
The revision shall clear the clouds for the usage of the Input tax credit. The other territory vision would be insignificance when the supplier and the recipient both are in India.
Effect of Skipping GST Section 13(9) of the IGST on Freight for Goods’ Transportation Outside India
Prior to Omitting Section 13(9):
- Where either the recipient or supplier of services is Outside India
- The transportation of goods services excluding the way of mail or courier.
- The transaction is counted beneath the particular statute under section 13(9) of the IGST act.
- The place of supply regarded the destination of the goods as “other territory” and GST was not levied on the freight for the goods transportation to place outside India.
After Skipping GST Section 13(9) Under IGST, Supplying Place will be Identified Under Section 13(2) of IGST Act
The supply of services place will be the location of the recipient of the service.
When the recipient’s service location does not available in the normal course of business then the supply place will be the location of the supplier of service.
POS is learned to be the recipient’s location when the recipient does not a registered individual and the address of the recipient exists on record.
According to the table, CGST/SGST/IGST will be levied, on the freight for the goods transportation to a place outside India.
| Proper Address of Service Recipient | Proper Address of Service Recipient | Supplying Place | CGST Applicability | SGST Applicability | IGST |
|---|---|---|---|---|---|
| USA (Address Available) | Maharashtra | USA | Not Applicable | Not Applicable | Not Applicable |
| Maharashtra | USA (Address Available) | Maharashtra | Not Applicable | Not Applicable | Applicable |
| USA (Address Available) | UK | Not in Indian Territory | Not Applicable | Not Applicable | Not Applicable |
Hence, the freight paid to overseas agents for the export shipments shall not get taxed in India, IGST would be required to get paid by the service recipient beneath the reverse charge mechanism.
The same shall draw Indian Shipping Lines/NVOCC/Forwarding Companies in part with Overseas Shipping Lines/NVOCC/Forwarders.
The Exporters/Freight agents who were not filing the GST on Export freight via using their overseas network/payment to overseas shipping line/NVOCC/freight forwarders needed to pay applicable GST under reverse charge if paid by them to overseas shipping lines/NVOCC/Forwarders.
