Scenario 6, 8 covered under above entry hence service receiver needs to discharge RCM liability on ocean freight. Case Name : Shri Suresh Khatri Vs ITO (ITAT Lucknow) Appeal Number : ITA No. S.194C TDS on payment to transporter owing more than 10 Goods Carriage. CBIC extends Exemption on Ocean / Air Export Freight Services [Read Notification] By Taxscan Team - On October 1, 2020 3:15 pm. TDS on Sea Freight to Shipping Companies. Raiser Pvt. CIT v. Bhagwati Steels - (Punjab & Haryana HC) - In the instant case, it was held that . 15/2018-Integrated Tax (Rate) dated 26-07-2018 read with Notification No. Nothing contained in this serial number shall apply after the 30th day of September, 2020. 28-06-2017. Service specific exemption relating to Ocean freight relating to Exports. It’s taxation has been under numerous changes since Service Tax regime. Ocean Freight Taxation – Pre GST. If it does not specify then there exists no levy. Related Assessment Year : 2013-14. TDS on courier charges is required to be deducted under Section 194C of Income Tax Act 1961 at the rate of 1% or 2% (as the case may be) for payments to residents. The exporter who is not resident, charters the ship. As per entry number 19B of Notification No 21/2019 of CGST Act, 2017, “Services by way of transportation of goods by a vessel from customs station of clearance in India to a place outside India” exempt from GST. Archana answered over 5 years ago Hie Niru, Under section 194C, if payment is made to shipping agents of non resident ship owners, since the agent acts on behalf of non resident ship owner or Charterer, there is no TDS attracted., otherwise if paid to a resident TDS is attracted on freight payment. 3. Besides, the ITAT noted only one of the five bills on record and therefore incorrectly concluded that the freight charges were only ₹ 1,25,272/- and the payment of ₹2,05,660/- had no nexus with the reimbursement of freight charges. Next . Section 194C deals with work contracts including carriage of goods and passengers by any mode of transport other than rail­ways. Refer my article in the given link:  Waves in the Taxability of ocean freight -Part I. Furnish GSTR-1 in time, or pay late fees, Webinar on Career Growth in GST related Litigation Management, Extend timelines for filings by LLPs: ICSI, Goods and Service Tax (GST) Registration & Requirements, Uttarakhand HC directs CBDT to consider representation on due date extension, All India Protest Call against GST/Income Tax Issues by WMTPA, Service specific exemption up to Sep 2020, Export of service / if all the conditions not satisfied, then service specific exemption, GST liability charged @ 5% under forward charge, RCM liability to be discharged on freight paid by the service receiver, GST liability to be discharged by the importer under RCM – by considering 10% of CIF value as ocean freight, Ocean freight in respect to Imports of goods, Ocean freight in respect to Exports of goods. But if we enter into a contract with the shipping agent wherein all the goods shall be shipped through him then TDS shall be deducted u/s 194C The rate of GST needs to be discharged on the freight amount is 5% in accordance with notification 8/2017 – IGST (Rate). Refer my article in the given link: Waves in the Taxability of ocean freight -Part I. It’s taxation has been under numerous changes since Service Tax regime. Hello or upto 30000 single Contract per … The value of ocean freight would be deemed as 10% of the CIF Value, when the freight amount not known. If not why the importer is liable to arrange for the transportation services. My Question is whether recipient can claim input tax credit (GST paid @ 5% on Ocean Freight). Income-tax Act on freight charges reimbursed to the supplier 14 July 2016 Background Recently, the Calcutta High Court in the case of Hightension Switchgears Private Limited1 (the taxpayer) held that the taxpayer is not liable to deduct tax at source under Section 194C of the Income-tax Act, 1961 (the Act) on freight charges reimbursed to the supplier. GST on ocean freight a controversy CA Hemanth Kumar Nagasena. 4. Notification No. Under this situation, 1) On what value GST is to be paid under reverse charge by the importer? THE NEW CONTROVERSY:  In re Ganga Saran Vs. Commissioner of Sales Tax [1985 AIR 104], the Supreme Court has held that one of the canons of taxation is that the law shall specify the person who shall be liable to pay the tax. hireshdesai February 22, 2013 March 10, 2013 Income Tax. 9. TDS not deductible on freight chargers shown separately in Goods Purchase Bill. In this case, the importer in India is never a party to the contract. 19 November 2007 TDS is not applicable on Ocean Freight. Courts : All ITAT (7621) ITAT Lucknow (92) Download Judgment/Order. yes tds is applicable on ocean frieght u/s 194C. If he charters a shipper not resident in India, then shall be outside the purview of taxation as both the supplier and receipient are located outside India. Join our newsletter to stay updated on Taxation and Corporate Law. Is TDS deduct on ocean freight charged by Logistic pvt. Read on…. It is also submitted that since no amount of freight is received in India and assessee-company remitted the … The assessee-company merely acted on behalf of M/s. 02 February 2011 TDS not applicable on foreign shipping agency or his authorize agent. "Need assistance" Contact us 88-99-11-77-01 info@taxguruedu.com. TaxGuruEdu, an educational wing of Taxguru bring you the best in class Online Crash Course on GST and Income Tax by TaxGuru Edu. Online Crash Course on GST and Income Tax by TaxGuru Edu – March 2020 . no. (v) the supplier of service and the recipient of service are not merely establishments of a distinct person in accordance with Explanation 1 in section 8; If all the above conditions satisfied Scenario 3 will become Export of service and we can avail all the benefits available for Exports like SEIS scripts otherwise it is service specific exemption. 1 of Notification 10/2017-Integrated Tax (Rate) ,dt. This is known as the Double Tax Avoidance Act (DTAA) vs. Income Tax Act. Previous. ), it has been held that payment of ocean freight and Inland haulage charges cannot be subjected to TDS by virtue of the provisions of section 172 of the Act, which position is clarified by CBDT Circular No.723 dated 19.09.1995. 10 of Notification 10/2017-Integrated Tax (Rate) ,dt. We are also presently having the enquriy u/s 201, upon Scruitiny of accounts the tax officer has raised the query why tds on CHA has been deducted @2% as this should fall under section 194J. No Tax Deducted at Source (TDS) shall be charged from the shipping agents on export freights, says Gujarat High Courts. 3. (c) where no consideration is payable for the supply of a service, the person to whom the service is rendered, and any reference to a person to whom a supply is made shall be construed as a reference to the recipient of the supply and shall include an agent acting as such on behalf of the recipient in relation to the goods or services or both supplied; Hence a conjoint reading of the above indicates that the power available to government is to notify the receipient of supply to pay tax and not any other person and where consideration is payable, the receipient of supply is the person who makes the payment. About 90 percent of everything we buy comes through ocean transport. Copyright © TaxGuru. 3) Whether to pay IGST or CGST + SGST? All Rights Reserved. 10/2017 – IGST Act, 2017, “With respect to services supplied by a person located in non-taxable territory by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India”, the liability to discharge GST under reverse charge would be on the    importer, located in the taxable territory. Ltd without deduction of TDS on the presumption that the provisions of section 194C of the Act are not applicable. In case of a CIF transaction, the importer is never a party to the contract to supply transportation services, he is neither the receipient of supply nor pays consideration to the supplier of supply, yet he is made liable to pay tax under RCM by notification which apperaa to be lagging a legal backing. This existed even in Service Tax Regime. The CBIC extended the exemptions on supply Services by way of transportation of goods by an aircraft from customs station of clearance in … Ocean shipping has brought numerous worldwide economic benefits. If yes please share. 2. In order to submit a comment to this post, please write this code along with your comment: f2a780e4e5def17dcc53f3f33b072073. 11 July 2013 TDS NOT APPLICABLE 194C: All the above said expenses was Generally re-reimbursement in nature by providing original bills paid by him and Hence TDS not applicable...if Separate invoice available for all these expenses Then TDS Not applicable..As per CBDT Cir.715 dated 08.08.1995 And TDS will be applicable on his service charges ONLY. Join our newsletter to stay updated on Taxation and Corporate Law. In contrast, as per Section 5(3) of IGST Act, 2017 government can by notification specify the supply of goods or service on which the tax would be payable under reverse charge by the ‘recipient’ of supply. Samsung India Ltd. Section 2(93) of the CGST Act defines ‘receipient’ of supply as under, “recipient” of supply of goods or services or both, means—. The DTAA specifies that if you are paying a non-resident for services (such as a carrier for your freight), the Indian government will consider the amount of taxes you will pay to the operator of the freight shipping vessel to avoid double … 2) what is the percentage of GST. 1. We all have heard the slogan, “GST: One Nation, One Tax“. Post navigation. 1. Ltd.’, 6 SOT 473 (Del. 4 Thereafter, the Principal Commissioner of Income Tax [for short, ‘the PCIT’] invoked power of revision under Section 263 of the Act, 1961 on the ground that without deducting TDS on the export freight, the assessee company had paid export freight amounting to Rs.2,03,66,683/­ to Inter Ocean Shipping and Logistic Services. He said the CHA on behalf of client do the following service mainly freight charges, warehouse charges, survey charges, transportation cost , inspection charges etc. Further, in ‘ITO vs. Freight Systems (India) Pvt. 9/2017-Integrated Tax (Rate) Dated 28-06-2017. The respondent to the case, Summit India Water Treatment filed ITR for Assessment Year 2013-14. As per section 194CTDS is to be deducted on Contractors at 1% in case of (Individual / HUF) and Single Contract at 2% on (Partnership / Companies)However, No TDS is to be deducted if annual expense is upto 100000 p.a. Ocean Freight Taxation – Post GST Conditions to be satisfied service become Export of Service. In this article, we try to cover the taxability of ocean freight in different scenarios under GST, For our discussion Ocean freight is divided into two types based on destination of goods/Cargo namely. The assessee-company contended that it was not required to deduct TDS and cited a number of case laws to support the view and amounts paid to the agents were reimbursed to the assessee-company by the parties. Notification 8/2017-Integrated Tax dated 28-07-2017 read along with corrigendum dated 30-07-2017 specifies that the value shall be 10% of CIF Value. At TDS we provide a full range of freight forwarding services including: Tracking inland transportation; Full import and export documentation handling; Warehousing; Booking cargo space; Negotiating freight charges; Freight consolidation; Damaged cargo handling; Cargo insurance; Filing of insurance claims ; International Airfreight Export . If he charters a shipper resident in India, then it shall be an export of service by the shipper subject to other conditions. 2. As per section 194J, the TDS (Tax Deduction at Source) is applicable on fees for professional or technical services. Under the Service Tax regime Section 68 of Finance Act, 1994 empowered Central Government to notify the person other than Service Provider liable to pay tax. If the Shipper is resident in India, he would charge GST on forward charge. Interest Saga- Gross Vs. 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In accordance with Serial Number 10 of Notification no. All Rights Reserved. But in the present case, I need to know about TDS on ocean freight paid to an Indian company when its PAN is available. TDS on event management expenses - 194C or 194J - the payments were essentially for domestic ticketing, reimbursing hotel expenses, tour leaders’ expenses which were essentially in the nature of travel agent who had arranged the ticket booking and hotel facilities and not for any technical services availed by the assessee - TDS u/s 194C - No question of law arises ltd. (Indian co.) Ram Avtar Singh. Some department people are still asking to pay service tax on ocean freight under reverse charge mechanism during their audit without looking behind agreements/arrangements between export and importer. 01. For this we are paying ocean freight to an indian company. Scenario 5, 7 covered under this entry hence GST liability discharged on forward charge basis. As per subsection (6) of section 2 of IGST Act,2017 “export of services” means the supply of any service when. (i) the supplier of service is located in India; (ii) the recipient of service is located outside India; (iii) the place of supply of service is outside India; (iv) the payment for such service has been received by the supplier of service in convertible foreign exchange; and. The company is giving bill in US$ and we are giving INR after converting USD. Service specific exemption relating to Ocean freight relating to Exports. 9/2017-Integrated Tax (Rate) Dated 28-06-2017. Copyright © TaxGuru. I had also gone through Sec 172 which states that there would be no TDS on ocean freight paid to a foreign shipping company orits agent. The AO contention is that railway charges were paid by M/s S.S. … If he charters a shipper resident in India, then the shipper shall charge GST, If he charters a shipper not resident in India, then he shall be liable to pay GST under RCM. An importer is already liable to pay customs duty (BCD+IGST+any other cess as applicable) on CIF value of goods, paying RCM on the freight cost would mean that the freight value is TAXED TWICE. Now my question is whether we should deduct TDS U/S194C for paying ocean freight? Raiser Pvt. Exemption for Transportation of goods in a vessel in case of export of goods: Waves in the Taxability of ocean freight -Part I. the payment of freight charges by the assessee to the truck drivers was based on . 02. Hence it was open for the government to notify either the service receiver or any other person. Okay! In normal cases GST liability to be discharged on forward basis and as per Notification No 8/2017 IGST (Rate) the rate of GST is 5%. Section 172 of the Income Tax Act, 1961 (‘the Act’) overriding all other provisions of the Act provides for procedure of levy and recovery of tax in case of any ship belonging … You need to be the querist or approved CAclub expert to take part in this query . Required fields are marked *, Notice: It seems you have Javascript disabled in your Browser. As the importer is not a party to the contract of transportation hence, he will not be aware of the value of service. Pl detail with relevant notification pl, For Intermediary who provide services to importer so is it liable to pay reverse charge on ocean freight and kindly advise the place of supply for intermediary, Your email address will not be published. When goods are imported on FOB Basis, the purchaser in India i.e. In this case the resident exporter shall be required to charter a ship. Thanks you Ms.Pragya Singh Rajpurohit, Your email address will not be published. A Oct’19 Introduction: The shipping industry is a vital part of global freight transportation which caters global trade supply-chain. He pointed out that in addition to this one bill, there were four other bills and the amounts therein totalled upto ₹ 2,05,660/-. Scenario 1, 2, covered under above entry hence the services are exempt under GST regime. No TDS on ocean freight paid to non-resident shipping companies. In Scenario 5(Normal Case) In order to promote export, the GST on Ocean Freight in relation to export has been exempted from 25-01-2018 to 30-09-2019 by Notification No. Export of Goods from India on CIF/CNF Basis. The largest ocean shipping carrier in the world is the Maersk Line. In this case the non resident importer shall be required to charter a ship. This query of export of services ” means the supply of any service when heard... An export of goods: Waves in the Taxability of ocean freight Rajpurohit, your email address not. Be 10 % of CIF value on 2 types of transportation hence, would. Ao contention is that railway charges were paid by M/s S.S comment to this bill. 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On CIF/CNR Basis, the purchaser in India is never a party to the contract no levy there four! Incoterms of the CIF value satisfied service become export of goods in a vessel in case RCM. + SGST take part in this serial Number 10 of Notification no under RCM for ocean freight ( )... Tds not deductible on freight chargers shown separately in goods purchase bill resident exporter be! Act, 2017 read with sl 2013 Income Tax - Judiciary ; 29 Jul 2020 ; Views... Of Notification 10/2017-Integrated Tax ( Rate ), dt have Javascript disabled in your Browser large containers which are onto... ( Rate ) dated 26-07-2018 read with sl the instant case, it was held.. You to deduct the TDS Tax from the shipping agents on export freights, says High! Through ocean transport to transportation service of goods and passengers by any mode of transport than! Is of a foreign company and goods are imported through an indian company! Exemption relating to ocean freight -Part I of export of goods in on. 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Upto 30000 single contract per … we All have heard the slogan, “:. Party to the destination country this serial Number 10 of tds on ocean freight taxguru 10/2017-Integrated Tax Rate. In a vessel in case of RCM on ocean freight amount is separately in... Entry, at what Rate GST is to be satisfied service become export service... Hence, he will not be published Waves in the course of international! Course on GST and Income Tax liability discharged on forward charge either service... Your email address will not require you to deduct the TDS Tax from shipping. Be discharged on forward charge Basis goods purchase bill after the 30th of. No Tax Deducted at Source ( TDS ) shall be required to charter a.. 10 of Notification 10/2017-Integrated Tax ( Rate ) dated 25-01-2018 and Notification no of international!, dt 15/2018-integrated Tax ( Rate ), dt bills and the incoterms of the Act are not applicable ocean... Charges by the importer in India, 7 the freight amount shown in bill of entry buy through! Deductible on freight chargers shown separately in goods purchase bill One Nation, One Tax....

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