India – Implementation of Changes in India’s Local Service Tax Amendment
May 12, 2016
With reference to our previous CustomerInfo on the subject matter on May 9, 2016, we would like to provide an update with amendment as indicated below in blue.
The Indian Government had introduced amendments in the recent Union Budget announcement on February 29, 2016 and the following will be effective from June 1, 2016:
a) The Import Freight has been removed from the negative list and it is now taxable
b) The New Krishi Kalyan Cess (KKC) tax at 0.5% of the value of taxable services will be implemented
Therefore, please be advised that with effect from June 1, 2016 ocean freight for all import shipments destined to India will be subject to a tax rate of 4.5%, comprising of the following, which will be on the abated value on 30% of the service:
Service tax at 14%
Swachh Bharat Cess tax at 0.5% and
Krishi Kalyan Cess tax at 0.5%
According to section 34(c) of the Notification No. 25/2012 dated June 20, 2012 tax will not be applicable for services provided by the carrier located outside of India to a recipient that is also located outside of India. In addition, please note that Service Tax aggregating to 15% will be charged on all taxable services other than Import Ocean Freight in the invoice.
For further information please contact your local Hapag-Lloyd Finance at firstname.lastname@example.org.