Dear Valued Customers,
With reference to the service tax amendment as regards to freight prepaid and elsewhere, kindly take note of below
Prior to 22/01/2017 when both - Service Provider and Service Receiver, who were located outside Taxable territory of India, same were getting exempted from Service Tax vide Entry Number 34 of Notification 25/2012 (Mega Exemption Notification).
Now with the release of Notification No. 01/ 2017 dated 12.01.2017, Amendment has been made stating that the exemption under Entry Number 34 would not be applicable to: “Services by way of Transportation of goods by a vessel from a place outside India up to the customs station of clearance in India’ (i.e. inbound cargo transportation or Import cargo).
Thus, Prepaid & Elsewhere Import Ocean Freight & ancillary Ocean charges will be liable to Service Tax in the form of a percentage applicable to the ocean freight as set below.
MSC will invoice Service Tax on Prepaid Import Ocean Freight to shipper at Origin. For Ocean Freight manifested as Elsewhere, the Elsewhere location shall invoice said Service Tax to party paying freight
If shipper advise that Service Tax on prepaid/elsewhere freight will be payable by consignee in India, then MSC Bill of Lading (BL) will have clause “Service Tax on Ocean Freight and ancillary ocean charges payable at Destination”
Please note that these changes will be effective on all import shipments under bill of lading (B/L) dated on or after 22/01/2017. For any further information on the Service Tax applicable percentage on your freight, please contact your local agent
MSC Line appreciates your understanding, Tax Compliances and Continued Support.