Way back in 2018, the Central Board of Indirect Taxes and Customs (CBIC)  exempted services by way of transportation of goods by vessel or aircraft from customs station of clearance in India to a place outside India vide Notification No. 2/2018 – Integrated Tax (rate) dated 25 January 2018. The exemption was notified with a sunset clause and was applicable till 30 September 2018.  However, the exemption was extended from time to time vide Notification no. 15/2018 – Integrated Tax (Rate) dated 26 July 2018 and Notification No. 20/2019 – Integrated Tax (Rate) dated 30 September 2019 and the same was available till 30 September 2022.

However, there had been no extension of this notification implying that sunset has taken place and the exporters would now be paying the  GST on the   Air/Sea freight.  Thus, wef 01/10/2022, the following transactions would be taxable under GST:

  • Ocean Export freight billed to customers in India to be charged at the rate of 5%
  • Air Export freight billed to customers in India to be charged at the GST Rate of 18%

The export fraternity was expecting the extension of the exemption, however, the Central Govt. has not indicated any extension of the exemption for the future. With the withdrawal, there will be added pressure on the working capital and cash flow of exporters while the exporters are already under pressure to a lack of robust international export demand.

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February 2024