|09 February, 2016
India Service Tax on Import Prepaid Shipments – Effective January 22, 2017
Please be advised that, on short notice, the government of India issued a notification instructing service providers using sea route as a channel of transportation to collect a service tax on import prepaid shipments arriving into India, effective January 22, 2017.
(Previously, the service tax was applicable only on freight collect for import shipments.)
As per the notification, all import prepaid shipments are taxed at 4.5% of freight*. In order to fully comply with this new regulation, MOL Liner began collecting the service tax of 4.5% on sea freight and related freight charges (including freight-prepaid, freight-collect and third country payment) from consignees at destination for all import shipments into India.
With immediate effect, this service tax will be payable by the same party of freight payer with import shipments to India. However, the tax will be collected in India from the consignee if the shipper advises that such tax should be on “collect” basis.
MOL (Europe) b.v.
*As of January 22, 2017. Subject to further change from government of India.