Title: Key matters and Impacts of GST on freights in India

The most significant tax reform India has experienced is the Goods and Services Tax (GST). But it’s estimated to be a turning point for the freight forwarding industry.???

Since GST was implemented to stop multiple taxes from having a cascading effect on supply networks, it has altered the nation's taxation on goods and services. However, the freight industry hasn't considered the costs associated with export shipping until now.??

Therefore, per GST, the dealers convert logistics and freight forwarding into a service supply (moving goods through the sea, inland waterways, air, rail, or road). Nevertheless, GST must be applied across the board for all supplies, enhancing the workflow and making the process easier for the industry.??

Moreover, if the freight fee is included, the GST on freight charges must be calculated at the same tax rate as the rate due on the supply of the goods or consignment. Most of the contracts are structured around extended credit arrangements, especially in frequent or high-volume cases, which is a financial strain for freight intermediaries.??

Even though Indian exporters have requested the government to reinstate the 18% goods and services tax (GST) exemption on export freight and expand the use of the rupee as a medium of exchange to other nations, based on the World Commerce Organization's (WTO) prediction for a steep decrease in global trade in 2019. 65% of trade value and 95% of trade volume is in India, the 16th-largest maritime nation in the world, carried out by naval transport.??

Also, freight brokers and shipping lines play the most crucial role in the movement of products, making the shipping and logistics sector the backbone of the whole supply chain. Hence, regarding shipbuilding and recycling globally, India is ranked 21st among the top 5 nations for trained labour and seafarers.??

Besides the nation's rank, the impending recession in western nations has already affected India's exports, which fell in September 2022 after remaining unchanged in August. Data from the government shows that exports decreased by 3.52 per cent to $32.62 billion in September 2022 from the same month last year.??

Additionally, the government has planned to end the GST exemption on air and ocean freight at 18% and 5%, respectively, starting on October 1, 2022, which has been in place since it was first granted in 2018 and extended through September 30, 2022. When the exports of goods other than petroleum, diamonds, and jewellery are considered, the decline is more pronounced at 9.78 per cent. The fall is due to steps to control domestic inflation and food security concerns and a downturn in demand in some industrialized economies.??

But some industry issues need to be looked at soon.?

For instance, ships and other vessels are exempt from customs duty when imported into India. However, a 5% IGST, which is significant given the ship's value, has been imposed on the import of vessels or boats into India starting in July 2017.???

Conclusion:??

Lastly, given the importance of logistics and supply chain management, a single error can negatively affect a company's reputation. Consequently, sizable risks are involved for both the supplier and the customer. And implementing the Goods and Services Tax (GST) system had a variety of impacts on the Indian sector. Unquestionably, the logistics sector is one of these industries. However, the state-level registrations under GST were decentralized as opposed to the previous centralized service tax registration, which raised the number of compliances