INDIA's air forwarders are suffering a cash flow hit after the government imposed an 18 per cent GST on export freight charges, reports London's Loadstar.
GST is a value-added tax on goods and services, implemented in July 2017 to eliminate the cascading effect of multiple taxes on supply chains. But export transport costs were not included until now.
The forwarding community must now pay taxes on shipments handled on a monthly filing basis, and failing to do so will trigger hefty penalties. On outbound ocean freight charges, the tax rate is lower at five per cent.
Compliance could prove a major financial burden on freight intermediaries, as most contracts are typically built around extended credit arrangements.
'Money has to be deposited into the GST account even before we receive payments from clients,' said one Mumbai-based air forwarder.
Arvind Talan, CFO at Mumbai-based Jet Freight Logistics (JFL) said: 'It's a big concern for forwarders and exporters. The trade will get adversely impacted due to this.'
Said Vineet Malhotra, co-founder of Kale Logistics Solutions: 'The tax will also affect airlines, shipping and freight forwarding players. And this will strain the working cash flow of exporters who have yet to recover from the pandemic downturn.'
SeaNews Turkey
GST is a value-added tax on goods and services, implemented in July 2017 to eliminate the cascading effect of multiple taxes on supply chains. But export transport costs were not included until now.
The forwarding community must now pay taxes on shipments handled on a monthly filing basis, and failing to do so will trigger hefty penalties. On outbound ocean freight charges, the tax rate is lower at five per cent.
Compliance could prove a major financial burden on freight intermediaries, as most contracts are typically built around extended credit arrangements.
'Money has to be deposited into the GST account even before we receive payments from clients,' said one Mumbai-based air forwarder.
Arvind Talan, CFO at Mumbai-based Jet Freight Logistics (JFL) said: 'It's a big concern for forwarders and exporters. The trade will get adversely impacted due to this.'
Said Vineet Malhotra, co-founder of Kale Logistics Solutions: 'The tax will also affect airlines, shipping and freight forwarding players. And this will strain the working cash flow of exporters who have yet to recover from the pandemic downturn.'
SeaNews Turkey
