India Introduces 'Service Tax' for Imports

ON 22 January 2017 India introduced a new 4.5% tax on pre-paid imports, levied by the Indian Ministry of Finance for all cargoes landed in India on/after 22 January 2017.

The service tax is to be collected by foreign-owned shipping lines, who have already attempted to start collecting the tax from Australian exporters. Up until recently an exemption was given on pre-paid ocean freight.

The International Federation of Freight Forwarders Associations (FIATA) have asked for clarification on how the service tax would apply to transactions between two foreign entities that are outside of the local tax regime.

Taxable persons who are a part of the Indian tax regime could qualify for a tax credit and recover the tax paid, but that is not possible for a person outside of the tax regime.

Although the service tax rule says the provider of the service is responsible for paying the tax, it also allows for the recipient of the service – the consignee – to pay.

Seabridge export specialists employ their wealth of knowledge and experience navigate international freight forwarding to safeguard compliance and provide the most accurate advice. To speak with an export specialist about these recent tax changes or other concerns call Seabridge today on 1800 727 195.

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