‘No extension can defeat Atmanirbhar Bharat vision of GoI’

Federation of Freight Forwarders Association of India (FFFAI), in a letter to the Finance Minister, Nirmala Sitharaman stated, “If the exemption is not extended for next period, the trade will have to bear a huge cost which in turn will manifold and increase the logistic cost. The brief effect will be as below –
1.Export Air Freight – Services by way of transportation of goods by an aircraft from customs station of clearance in India to a place outside India – Tax rate shall be 18% –
2.Export Ocean Freight – Services by way of transportation of goods by a vessel from customs station of clearance in India to a place outside India – Tax rate shall be 5%
3.Input tax charged on goods (other than on ships, vessels including bulk carriers and tankers) used in supplying the service has not been taken (condition same as for Import freight services). After applicability of GST majority of import consignment are already being booked on CIF basis from abroad and a Indian freight companies who used to contract freight on behalf customer in India are already at the disadvantage since freight is not taxable abroad. The same is the case for Export with levy ability of 5% GST on Ocean Freight and 18% GST on Air Freight on Export consignments, the INCO Terms are likely to change from CIF to FOB. The Freight which is booked from India by Freight Forwarder will be taxable and such export freight booking will convert into INCO Terms FOB where Freight will be arranged to be paid in foreign country where there is no tax on freight. Multinational / Foreign freight forwarding companies will stand to get a major advantage against Indian companies due to levy ability of GST when booked / arranged from India and Exporters and Importers will prefer to get the Freight paid in foreign territory resulting into loosing Indian Freight logistics business to Foreign Companies. The above will shift the business opportunities of India, in the Freight Forwarding sector, to the foreign country thus defeating the Atmanirbhar Bharat vision of Government of India.