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GST Implemented in India

Glenn Hall, our Director of Sales, provides this update on the implementation of GST in India.

There has been some major tax reform in India with the implementation of GST away from indirect taxing systems effective 1 July 2017.

As with the implementation of VAT in China 2 years ago, while implemented, the full application is still murky and will be subject to change.

At this point:

  • Carriers have advised that they will be charging GST at 5% on prepaid ocean exports,
  • Freight collect ocean freight is not subject to GST, ACA International arranges all freight with our carriers on a freight collect basis so will not be subject to GST,
  • Carriers will apply GST of 18% on THC, Documentation and any other origin charges,
  • There will be 5% GST on import ocean freight moving on a collect basis, all ACA International freight is prepaid and not subject to GST,
  • 18% GST will apply on all destination charges on imports to India,
  • GST of 18% will be charged on export airfreight and all other India origin related charges,
  • Import airfreight into India does not attract any GST however any India destinations charges of airline and other local fees will attract GST at 18%,
  • If you are importing from India to Australia or New Zealand on an FOB basis your suppliers will be charged the GST, and
  • If you are importing from India to Australia or New Zealand on an EXWORKS basis or variable of that, then GST will be applied to origin fees. This raises the question on claim back of GST and we are still trying to get more information on this.

As part of these changes all Indian entities are required to be GST registered with the Indian government, your clients or suppliers must already have moved down this path to avoid issues on despatch or arrival.

India Customs system ICEGATE is also undergoing upgrade at the same time as the GST roll-out on 1 July.

This has created some very severe customs backlog in the 2 weeks of roll out, due to failure to register and a different processing method for India customs within a new working system. All expectations are that the backlogs would last for 8 to 14 days from roll-out but we are still seeing backlogs at different ports around India and will keep you updated on improvements or deterioration of the situation.

Our customer service and sales team will keep you update as best we can on this moving scenario.

To compound all the above parts of the Customs system in different ports were impacted on the global cyber-attacks in the last week of June.

So all in all, there are some challenges in clearing cargo into and out of India.

Glenn Hall
Director Sales