india

India plans to implement GST to all services

 

The Government of India is planning to implement GST to all services in India w.e.f 01st July 2017. Goods and Services Tax (GST) is to be one uniform tax throughout India to replace a range of taxes levied by the Central and State governments, thereby making India one unified common market.

GST is a tax reform which is going to impact every sphere of business activity, and replaces multiple taxes such as Central Excise Duty, Service Tax, Commercial Tax, Value Added Tax (VAT), Central Sales Tax (CST), currently levied by the Central and State governments. It is essentially a tax only on value addition at each stage of the supply chain hence there is no cascading effect.

Under the present indirect tax regime, freight charges on exports are considered exports of services and are exempt from the applicable Service Tax.

Export freight is, however, subject to 18% GST under the newly introduced GST rules. Because of this the Indian freight forwarding industry has lobbied the Indian government to obtain exemption of export freight services from the new GST tax regime as. So far government has not indicated that export related costs and freight charges will be exempted but trade representatives with the help of advisers are continuing to negotiate to obtain the exemption.

Therefore, if the government does not issue a communique before 01st July 2017 exempting freight charges, all freight charges will be subject to a  GST of 18 % .

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