‘Mumbai traders struggle with 18% GST on air freight’

Rajen Bhatia, Director, Tulsidas Khimji, India, Chairman, Northern Region, The Air Cargo Agents Association of India (ACAAI), “The implementation of 18 per cent GST on air freight has had several impacts on the freight forwarding process in Mumbai. While the introduction of GST was intended to streamline India’s indirect tax structure and create a more unified tax environment, its impact on freight forwarding operations has been mixed, especially in high-traffic regions like Mumbai. It has directly increased the cost of moving goods by air, especially for international shipments. Freight forwarding companies now have to bear the additional tax burden, which they often pass on to customers. This has led to an increase in the overall cost of air cargo services, particularly for businesses that rely heavily on-air freight for time-sensitive shipments. Freight forwarding companies need to pay the GST upfront on services rendered, which can lead to cash flow issues, especially for small-to-medium-sized businesses. While they can claim input tax credits (ITC) later, the upfront cost of 18 per cent GST impacts the working capital of logistics providers. Freight forwarders in Mumbai and across India have been forced to enhance their understanding of GST compliance, both for the services they provide (e.g., air freight) and for the broader logistics chain (customs, warehousing, etc).”