Government Extends Tax Waiver on Export Freight

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  • The Indian government has extended the waiver of the 5% Goods and Services Tax GST on export freight until September 2021.
  • The waiver will be applicable to both air and ocean export freight.
  • The tax relaxation is more crucial in the current scenario as exporters are already facing a double whammy of weak demand and high container rates.

The government of India has extended the waiver of the 5% Goods and Services Tax GST on export freight until September 2021, reports Platts.

GST waiver on exports

The announcement comes as a relief to exporters. The waiver will be applicable to both air and ocean export freight, India’s finance ministry said in a notification late September 30.

In January 2018, the Indian government announced the waiver of the 5% GST on export freight. While the relaxation was initially valid until September 30, 2018, the government has announced yearly extensions since then.

The deadline for the waiver was to expire on September 30, and there had been no word from the government until late evening, leaving exporters worried.

Major shipping liners CMA CGM, Hapag Lloyd, COSCO India had also released customer advisories about the impending increase.

A double whammy!

In past years, the announcement came well in advance, so this year speculation built that the government was not planning to extend the waiver, a freight forwarder based in India said.

However, the tax relaxation is more crucial in the current scenario as exporters are already facing a double whammy of weak demand and high container rates.

  • Container rates in India have been moving higher in recent months due to an acute equipment shortage in Asia on account of supply disruptions as the pandemic continues.
  • The situation is further aggravated by shipping liners diverting capacity on the trans-Pacific route due to record high prices, leaving exporters in other parts of Asia scrambling for empty containers.

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Source: Platts