Is service tax is applicable on freight, especially on ocean freight?

Sea freight for goods from outside India to first customs station of clearance in India not taxable. Sea freight for goods from India to outside India not taxable, since per rule 10 of Place of Provision of Service Rules, Place of Provision of Service is outside India.

**Answer to Is service tax is applicable on freight, especially on ocean freight?** In case of services of import of goods provided by freight forwarder, service tax is payable on entire charges, as place of provision of service is ‘taxable territory’ (India). The charges include ocean freight also. Ocean freight from a place outside India up to the first customs station of landing in India is not subject to service tax as it is in negative list of services as per section 66D (p) of Finance Act, 1994.Hence, it may be advisable to split the contract into three – one outside India (as intermediary), second ocean freight (actual basis) and third services within India. Exemption to transportation of food stuff by vessels will be limited to food grains including rice and pulses, flour, milk and salt. For transport by vessel , Service Tax shall be payable on 30% of the value of such service subject to a uniform condition of non-availment of Cenvat Credit on inputs, capital goods and input services with effect from 1st April 2015 for transportation of goods by vessel within India including Ocean Freight.

Hie Niru, Service Tax is not applicable on an ocean freight. Sea freight for goods from outside India to first customs station of clearance in India not taxable. Sea freight for goods from India to outside India not taxable, since per rule 10 of Place of Provision of Service Rules, Place of Provision of Service is outside India.

NO, SERVICE TAX SHALL NOT BE APPLICABLE IN CASE GOODS ARE TRANSPORTED BY 1. AN AIRCRAFT OR A VESSEL FROM A PLACE OUTSIDE INDIA TO THE FIRST CUSTOMS STATION OF LANDING IN INDIA. OR 2. INLAND WATER WAYS THESE SERVICES ARE MENTIONED IN THE NEGATIVE LIST OF SERVICES, THUS ARE NOT LIABLE FOR SERVICE TAX.

Services by way of transportation of goods by Aircraft or vessel from place outside india upto custom station of clearance in india is in included in Negative list under sec 66d (p)(ii) and hence not liable for service tax. ..