The CBIC previously approved an exemption from GST on air and ocean export freight until September 30, 2022, but that exemption has now expired. It was previously valid through September 30, 2018, but was later relaxed until September 30, 2022. In India, air freight is subject to an 18% GST, ocean freight is subject to a 5% GST. Starting on October 1, 2022, exporters will have to pay GST on the previously exempted two services.

The removal of the exemption also puts financial strain on MSME exporters. The airline, shipping, and freight forwarding industries will all suffer as a result of the freight tax. Also, taxpayers may have issues availing ITC on the GST paid to the Indian Shipping Company or Airline Company on freight amount for the export of goods and thus would be a cost to the exporter which will affect the working capital.

To help you understand and deal with the present scenario effectively, IRIS GST is hosting a LIVE webinar on the topic ‘Withdrawal of Exemption on Export Freight’ in collaboration with DAA Consulting, a leading consulting firm specializing in Indirect & Direct Taxation on 10th November 2022.