IGST on ocean freight likely to be scrapped

What? - The government is considering scrapping integrated goods and service tax
(IGST) on ocean freight and a proposal is likely to be taken up by the GST Council
next month. The move comes after the Supreme Court struck down the IGST on ocean
freight. This is likely to bring relief to importers awaiting clarity and tax
refunds post the judgement.

Why?- Ocean freight is a method of transport by which goods and cargo is

transported by ships via shipping lines. Most of the world’s trade is carried out
via sea. As per section 14 of the Customs Act, customs duty is payable on the
assessable value of goods which includes freight charges. Thus, IGST is payable on
the freight element by including it in the assessable value. So, again charging
IGST on freight amount will amount to double taxation, which is unconstitutional.

Implications - Reduction of the extra baggage of tax that the importer bears,
hence, eliminating a rudimentary extra cost that is incurred due to double
taxation. This would ease the import process and thus reducing such incidents of
inconvenience for the importer.