On July 1, 2017, a Goods and Services Tax (GST) was enacted throughout India to replace multiple cascading taxes previously levied by state and local governments. Introduced as one indirect tax for the whole nation, the GST was created to unify India’s tax system—fostering one common market and creating uniformity of tax rates and structures.
Freight forwarding and the logistics and shipping industry are at the center of the new law. The GST contains extensive provisions with regard to the State Goods and Service Tax (SGST); Central Goods and Service Tax (CGST); Integrated Goods and Service Tax (IGST) and other factors related to the supply of goods and services, input tax credit, time and place of supply, valuation, and provisions for transition.
To increase awareness of the new tax structure, Deringer has been working with international partners in India to determine the impact of the GST to shipments into and out of India—included below.
GST per Government notification:
- GST is applicable @ 18% on Ex-works charges for Air/Sea (LCL/FCL) shipments out of India.
- GST is applicable @ 18% on DAP/DDP charges as well for Air/Sea (LCL/FCL) shipments into India.
- GST is applicable @ 5% on Ocean freight rates if the same is paid in India (FCL or LCL, Imp or Exp).
- GST is applicable @ 18% on Air Freight if the air shipment term is CFR/CFI (i.e. HAWB is prepaid), on Air Exp shipments out of India.
- GST is applicable @ 5% on Air Freight for air import shipments, if the air freight is payable in India.
Deringer will continue working with our international partners to provide further insight into the impact this change will have on importers and exporters. If you have any additional questions about India’s new tax structure, please send an email to Deringer’s Marketing Department.