“Understand the impact of the deletion of Section 13(9) of the IGST Act 2017 on export freight taxation. Learn why the change was necessary, and how it affects both Indian and Foreign Shipping Lines. Stay updated on GST regulations for the transportation of goods by vessels.”
Export freight charged by Indian Shipping Line to Indian exporter is taxable and the place of supply is determined as per Section 12(8) of the IGST Act 2017. But freight charged by Foreign Shipping Line was not taxable as supply by Foreign Shipping Line to Indian exporter for transport of goods to a place outside India (Section 13(9) of IGST Act 2017). Because the place of supply was out of taxable territory so it was not an import of service hence, not liable to GST.
Due to the above reason, Indian exporters were preferring Foreign Shipping Line over India Shipping Line. So there was a need to change the place of supply for such services under section 13 (9) of the IGST Act 2017 from “place of destination of goods” to the “location of the recipient of service”
So, now after the deletion of section 13(9) of the IGST Act 2017 both Indian Shipping Lines and Foreign Shipping Lines have identical liability to pay or to not pay IGST on the transportation of goods by a vessel from India to outside India and vice versa.
Impact of deletion of Section 13(9) of IGST Act 2017
| Nature of Service | Before deletion of Section 13(9) of IGST Act 2017 | After deletion of Section 13(9) of IGST Act 2017 |
| Supply of transport services by a Foreign Shipping Line located outside India to an exporter located in India for transporting goods from India to the UK | As per section 13(9) as the place of supply of such services is the place of destination of goods i.e. UK. So, it is not an Import of Service, hence not liable to GST. | Now the place of supply of such services will be governed by Section 13(2). As the place of supply of such services is the location of the recipient of the service i.e. India. So, it will be an Import of Service, hence liable to GST. |
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Nicely written sir 👍
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