In respect of imports made by sea (ocean freight), where freight amount has been paid by the supplier to the liner (both situated outside taxable territory – CIF basis), the importer in India is liable to pay IGST under RCM as per Notification No. 10/2017 IGST (Rate) dated 28/06/2017 (S. No. 10).

Relevant Section: Section 5(3) of the IGST Act 2017

Relevant Notification: Notification No. 10/2017 IGST (Rate) dated 28/06/2017 (S. No. 10)

Relevant Notification: Notification No. 8/2017 IGST(Rate) corrected vide corrigendum dated 30/06/2017

Relevant part of Notification No. 10/2017- Integrated Tax (Rate) is given below:

S.No.	Category of Supply of Services	Supplier of Service	Recipient of Service
10	Services supplied by a person located in non- taxable territory by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India.	A person located in nontaxable territory	Importer, as defined in clause (26) of section 2 of the Customs Act, 1962(52 of 1962), located in the taxable territory.

Applicability of RCM on Ocean Freight

As per Section 5(3) of the IGST Act 2017 read with notification No. 10/2017 IGST (Rate) dated 28/06/2017 (S. No. 10), services supplied by a person located in non-taxable territory by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India, the whole of integrated tax leviable under section 5 of the said Integrated Goods and Services Tax Act, shall be paid on reverse charge basis by the importer as defined under clause (26) of Section 2 of the Customs Act, 1962 of such goods.

Tax Calculation

Case I: If the freight value is available with the taxpayer, then we can take that value and calculate the IGST at 5% rate.

Case II: If the actual freight value is not available, taxpayer is liable to pay IGST on the value stipulated in notification No. 8/2017 IGST(Rate), which was corrected vide corrigendum dated 30.6.2017, that is 10% of sum of cost, insurance and freight (CIF) value of such imported goods.

So, we have to calculate 5% IGST on 10% of CIF value.