GST Council to discuss tax parity for foreign and Indian shipping lines

Currently, while the export freight charged by Indian shipping lines to Indian exporters is taxable, the same charged by foreign shipping lines are not taxable (Representative image)

The Goods and Services Tax (GST) Council is likely to discuss the issue of bringing parity in taxation on Indian and foreign shipping lines to Indian exporters on February 18, sources said.

“The Council is likely to discuss an amendment in the IGST (Integrated Goods and Services Tax) Act to change the place of supply of transportation of goods from ‘destination of goods’ to ‘location of the recipient’. This would ensure that both foreign and Indian shipping lines have identical liability to pay or not pay IGST on transportation of goods by vessels from India to outside India and vice-versa,” sources said.

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Currently, while the export freight charged by Indian shipping lines to Indian exporters is taxable, the same charged by foreign shipping lines are not taxable as supply to Indian exporters for the transport of goods to a place outside India is neither an inter-state nor an intra-state supply.

Also read: Will the GST Council be able to think big and bold?

As a result, Indian exporters preferred foreign shipping lines over Indian shipping lines.