New Delhi,5th October: The implementation of GST is having a drastic impact on freight forwarding companies. According to financial express, it is expected to lose Rs. 20 thousand crore international freight forwarding business to international competitors due to tax parity caused by GST.
Under section 13(9) of GST Act 2017 freight forwarding companies have to levy GST on all shipments to India whereas the overseas companies are free from this kind of taxation. It simply means that those who want to export or import goods from India would prefer overseas companies rather than the Indian companies.
Nailesh Gandhi, the director, Express Global Logistics, told FF that overseas suppliers to India usually prefer Indian freight forwarders because of their familiarity with the Indian customs procedures, documentation and other formalities. Gandhi said, “This is a business that had been gaining traction over the last seven-eight years. However, since an overseas company cannot claim input credit, they have stopped preferring Indian freight vendors.”
The companies would suffer from an additional loss as section13 of IGST act Act provides for a tax on services performed on the goods, such as value-added services like packaging, labelling or painting.
The estimated numbers of these SMEs are around 50,000 to 70,000.