GST for Customs Brokers, Goods and Services Tax - GST

[Basha Sikander]

Dear Sir,

Good Afternoon.

We are a Customs Broker having PAN India presence. Our CB Licence is extended to all major ports. Due to introduction of GST, our Business Model or Process of doing business is seems to affected partially. The details of the same is listed below:

1. We have 4 or 5 Major offices at ports and other offices are very small and having very limited staff as the business is ON and OFF. We have kept these offices for applying for tender and also for some Projects received or expected in future. Our question is Whether we need separate registration for all these offices as well as they situated in different states ??

2. Being Customs broker we incur certain charges prior to clearance of Import and Export of Goods on behalf of the Customer and claim them as re-imbursement. This has been earlier recognised by CBEC as "PURE AGENT". We are given to understand that this concept is NO MORE AVAILABLE... Please clarify.

3. When we are paying and taking the amount as re-imbursement without any value addition why the GST is to be applied. If this provision is available, please clarify how to raise the bill - Is it through Invoice, Debit note without GST??

4. Whether the concept of ISD is applicable to our trade ?? If so, please guide on how to do it?

5. When the goods are imported, the GST is levied on CIF + 1 % = Assessable Value basis. Then why freight is separately charged for GST from Freight Forwarder or Shipping Line or Airline?? Atleast for Import this should be droped or amended?? Please clarify??

6. Similarly when the goods are exported by AIR and SEA there is two different slabs for taxing the freight - AIR -18% and SEA -5%. Here notably, the main cost of operations for AIR or SEA is FUEL, which is still out of Purview of GST, then it is taxed under GST?? Out of academic interest would like to know the logic behind taxation of Import and Export Freight??

7. Being Customs Broker, we also bound to give end to end solution of Transporting the Goods to Customer's Place and vice versa. Mostly we are taking vehicle from the Market, which sometimes owned by the Supplier and sometime being outsourced by him as well. The supplier bills us at X price and we bill it to Customer at X+Y ( Y is our margin). While we bill to customers some with RCM by Customers and some we charge S.Tax (as they may or may not pay S.Tax) under GTA. Whether the same process can continue under GST regime??

8. While reading some of the slides / notes shared, it is mentioned that if the Customer does not make payment to Supplier within 180 days, the ITC will be reversed and the Customer has to pay GST. Is this correct ?

9. If the point no.8 is correct, how the Department will come to know whether the payment are made or not?? Does it provide legal security to Supplier for getting confirm payment if the ITC is taken by the Customers??

10. Whether the Concept of Bill of Supply will be applicable to Service Industries like us?

11. While we do customs clearance, we also some time, asked by customers to do Loading & Unloading at factory or site. We engage Forklift, Crane and other handling equipments for this activity. What is the GST rate applicable for this activity?? We were told that we need to apply the rate of the equipment being taxed under GST??

12. For Customs Broker buriness, whether following cost can be taken as ITC :

a. Telephone Expenses - Landline, Mobile, Internet, Dongle

b. Expenses incurred for Staff training / coaching etc paid to Professionals / Academy.

c. Expenses spent on Staff for their welfare like - Group Mediclaim, TEA / Coffee / Canteen Expenses, Uniform etc..

d. Capital Expenses spent other than Motor Car used by Directors.

e.

13. For Customs Broker, when and what are circumstances Reverse Charge Mechanism is applicable to Customs Broker

14. When the e-way bill is expected to be introduced ?? Also is there any API is available to take data from User's S/W to E-waybill portal for generating e-waybill?

15. Whether place of supply and receipt of supply must be shown in Invoice ?? If we bill to b2B Customer who is neither in place of Supply Say Chennai nor receipt of Supply - say Madurai. The business is received from a Friend who is located in Delhi and wanted us to clear and deliver the goods at Madurai but bill to him at Delhi? Whether SGST+CGST is to be charged ?? or IGST is to be charged??

Look forward for early clarification and all the questions are raised purely on our current difficulties / issues faced by Customs Brokers..

Thanks and Best Regards,

Nagarajan PV

[email protected]

Posts / Replies

[CA. ANCHAL RASTOGI]

Answer for question 1. Yes you have to take registration separately for each state if you are:

a. required to keep office at every port according to any compulsion / requirement /condition of registration with custom / port authority

and / or

b. you are required to issue invoice only from those offices from where services are rendered.

[CA. ANCHAL RASTOGI]

Answer to query 2. As a agent you are required to incurred some expenses on the behalf of importer and these expenses are reimbursed to you on actual basis by the importer on submission of actual bill of those expenses. I think you are not liable to pay GST on those bill while you submit it to importer because you are claimed it as your expenditure.

[Kishan Barai]

. We have 4 or 5 Major offices at ports and other offices are very small and having very limited staff as the business is ON and OFF. We have kept these offices for applying for tender and also for some Projects received or expected in future. Our question is Whether we need separate registration for all these offices as well as they situated in different states ??

And : Yes Separate Registration would be Required

2. Being Customs broker we incur certain charges prior to clearance of Import and Export of Goods on behalf of the Customer and claim them as re-imbursement. This has been earlier recognised by CBEC as "PURE AGENT". We are given to understand that this concept is NO MORE AVAILABLE... Please clarify.

Ans : Every Services would be given by CHA would be under 18% categories

3. When we are paying and taking the amount as re-imbursement without any value addition why the GST is to be applied. If this provision is available, please clarify how to raise the bill - Is it through Invoice, Debit note without GST??

Ans : same as ans 2

4. Whether the concept of ISD is applicable to our trade ?? If so, please guide on how to do it?

ans : No

5. When the goods are imported, the GST is levied on CIF + 1 % = Assessable Value basis. Then why freight is separately charged for GST from Freight Forwarder or Shipping Line or Airline?? Atleast for Import this should be droped or amended?? Please clarify??

ans : For Imports it's Basic + IGST on CIF

6. Similarly when the goods are exported by AIR and SEA there is two different slabs for taxing the freight - AIR -18% and SEA -5%. Here notably, the main cost of operations for AIR or SEA is FUEL, which is still out of Purview of GST, then it is taxed under GST?? Out of academic interest would like to know the logic behind taxation of Import and Export Freight??

Ans : 90% of Exports are carried out by sea from India , so 18% is too much rate for it , so it has been reduced to 5%

7. Being Customs Broker, we also bound to give end to end solution of Transporting the Goods to Customer's Place and vice versa. Mostly we are taking vehicle from the Market, which sometimes owned by the Supplier and sometime being outsourced by him as well. The supplier bills us at X price and we bill it to Customer at X+Y ( Y is our margin). While we bill to customers some with RCM by Customers and some we charge S.Tax (as they may or may not pay S.Tax) under GTA. Whether the same process can continue under GST regime??

Ans : You can take ITC for CGST, SGST or IGST

8. While reading some of the slides / notes shared, it is mentioned that if the Customer does not make payment to Supplier within 180 days, the ITC will be reversed and the Customer has to pay GST. Is this correct ?

Ans : Yes

9. If the point no.8 is correct, how the Department will come to know whether the payment are made or not?? Does it provide legal security to Supplier for getting confirm payment if the ITC is taken by the Customers??

Ans : You need to upload all bills on GST portal, there will be strong scrutiny by department as bank account are also linked to portal

10. Whether the Concept of Bill of Supply will be applicable to Service Industries like us?

Ans : No , you need to create Invoice with bill to & ship to

11. While we do customs clearance, we also some time, asked by customers to do Loading & Unloading at factory or site. We engage Forklift, Crane and other handling equipments for this activity. What is the GST rate applicable for this activity?? We were told that we need to apply the rate of the equipment being taxed under GST??

Ans : 18%

12. For Customs Broker buriness, whether following cost can be taken as ITC :

a. Telephone Expenses - Landline, Mobile, Internet, Dongle

b. Expenses incurred for Staff training / coaching etc paid to Professionals / Academy.

c. Expenses spent on Staff for their welfare like - Group Mediclaim, TEA / Coffee / Canteen Expenses, Uniform etc..

d. Capital Expenses spent other than Motor Car used by Directors.

Ans : Yes

e.

13. For Customs Broker, when and what are circumstances Reverse Charge Mechanism is applicable to Customs Broker

Ans : Only if you purchase goods from URD worth 5000 or more, it would be Applicable

14. When the e-way bill is expected to be introduced ?? Also is there any API is available to take data from User's S/W to E-waybill portal for generating e-waybill?

Ans; yea

15. Whether place of supply and receipt of supply must be shown in Invoice ?? If we bill to b2B Customer who is neither in place of Supply Say Chennai nor receipt of Supply - say Madurai. The business is received from a Friend who is located in Delhi and wanted us to clear and deliver the goods at Madurai but bill to him at Delhi? Whether SGST+CGST is to be charged ?? or IGST is to be charged??

Ans : Yea , you need to create Invoice with bill to & ship to

[Ramesh Kothari]

very good Question

I am importer exporter I also would like to know the answer of the same though I know some of the answer Pl send all the Quarry to my mail ID [email protected]