GST for Shipping Company 2026 – Rates, Registration, LUT & ITC Guide
Complete GST compliance guide for shipping companies, vessel operators, and maritime logistics providers in India. GST 2.0 rates on coastal shipping, freight, vessel chartering, port services, and international shipping. Registration thresholds, LUT for exports, ITC on vessel expenses, and compliance essentials.
Quick Summary – GST for Shipping Company
- GST Rate on Coastal Shipping: 5% (without ITC) on coastal shipping services, or 18% (with ITC) – rate rationalised under GST 2.0.
- GST Rate on Freight & Chartering: 18% on freight, chartering, and other shipping services.
- International Shipping: Zero-rated under LUT – no GST on exports/imports.
- Registration Threshold: ₹20 lakh for service providers in normal states; ₹10 lakh for special category states. Inter‑state operators must register regardless of turnover.
- LUT for Exports: Shipping companies must file LUT for zero-rated international shipping services.
- ITC: Available on vessel maintenance, fuel, port charges, crew expenses, and insurance – subject to valid invoices.
- RCM: Reverse Charge Mechanism applies on services received from foreign shipping lines and certain port services.
Takeaway: Coastal shipping attracts 5% or 18% GST depending on ITC choice. International shipping is zero-rated under LUT. Registration unlocks ITC benefits on vessel expenses.
1. Introduction – GST Compliance for Shipping Companies in India
The shipping and maritime industry is the lifeline of India's international trade, handling over 90% of the country's trade volume. For shipping companies, vessel operators, charterers, and maritime logistics providers, Goods and Services Tax (GST) compliance is a critical business function that affects pricing, cash flow, and competitiveness.
Under the GST framework, shipping services are classified under SAC Code 9965 (Transport services). The rate structure for shipping services is unique – coastal shipping attracts 5% GST (without ITC) or 18% GST (with ITC), while international shipping is zero-rated under LUT.
This comprehensive guide covers GST rates on shipping services, registration thresholds, Input Tax Credit (ITC) on vessel expenses, LUT for international shipping, Reverse Charge Mechanism (RCM), and common compliance pitfalls for shipping companies.
Takeaway: Coastal shipping GST rates depend on ITC choice (5% without ITC, 18% with ITC). International shipping is zero-rated under LUT.
2. GST 2.0 Rates on Shipping Services (2026)
Under GST 2.0, shipping services have a revised rate structure. The table below summarises the applicable GST rates for various shipping services.
| Service Type | SAC Code | GST Rate | ITC Availability |
|---|---|---|---|
| Coastal Shipping – Option 1 | 9965 | 5% | ❌ No ITC |
| Coastal Shipping – Option 2 | 9965 | 18% | ✅ Yes |
| Ocean Freight (International) | 9965 | 0% (Zero-rated) | ✅ Yes (via LUT) |
| Vessel Chartering (Domestic) | 9965 | 18% | ✅ Yes |
| Vessel Chartering (International) | 9965 | 0% (Zero-rated) | ✅ Yes (via LUT) |
| Port Services (Domestic) | 9965 | 18% | ✅ Yes |
| Crew Management Services | 9965 | 18% | ✅ Yes |
| Ship Management & Agency Services | 9965 | 18% | ✅ Yes |
| Bunkering / Fuel Supply (Domestic) | 9965 | 18% | ✅ Yes |
| Bunkering (International) | 9965 | 0% (Zero-rated) | ✅ Yes (via LUT) |
Key Changes Under GST 2.0 for Shipping:
Takeaway: Evaluate your input cost structure before choosing between the 5% and 18% options for coastal shipping.
3. GST Registration for Shipping Companies – Eligibility & Threshold
Under Section 22 of the CGST Act, 2017, registration is mandatory for shipping companies if the aggregate turnover exceeds the prescribed limit.
| Business Type | Normal States | Special Category States |
|---|---|---|
| Shipping & Maritime Services | ₹20 lakh | ₹10 lakh |
| Vessel Operators & Charterers | ₹20 lakh | ₹10 lakh |
| Inter‑State / International Shipping Operators | Mandatory regardless of turnover | Mandatory |
Mandatory Registration Cases for Shipping Companies
Voluntary Registration: Even if turnover is below the threshold, voluntary registration allows shipping companies to claim ITC on vessel expenses, port charges, and other business costs.
Takeaway: If your turnover exceeds ₹20 lakh, GST registration is mandatory. Registration is also required to file LUT for international shipping services.
4. Step‑by‑Step GST Registration Process for Shipping Companies
Note: After registration, file LUT on the GST portal to enable zero-rated international shipping services.
Takeaway: Complete registration and file LUT to start providing zero-rated international shipping services.
5. Documents Required for GST Registration – Shipping Company
- PAN Card of the business / proprietor / partners.
- Aadhaar Card of all promoters / partners.
- Proof of business address (rent agreement, electricity bill, or property tax receipt).
- Bank account details (cancelled cheque or bank statement).
- Import-Export Code (IEC) – mandatory for international shipping operations.
- Vessel registration documents (Certificate of Registration).
- Shipping company license / Certificate of Incorporation.
- Digital Signature Certificate (DSC) – mandatory for companies and LLPs.
Note: Import-Export Code (IEC) is mandatory for shipping companies handling international cargo.
Takeaway: Obtain IEC and vessel registration documents before applying for GST registration.
6. LUT for Zero‑Rated Supplies (International Shipping Services)
Shipping companies providing international shipping services (exports, imports, and international freight) can avail zero‑rating under GST by filing a Letter of Undertaking (LUT).
- Applicability: Zero‑rating applies to international shipping, ocean freight, and bunkering services.
- LUT Filing: File LUT on the GST portal (Form GST RFD-11) annually.
- Benefit: No GST payable on international shipping services; full ITC available on input expenses.
- Eligibility: Shipping companies must be registered and have a valid IEC.
- Compliance: Maintain proper records and file GSTR‑1 (zero-rated supplies) and GSTR‑3B.
Takeaway: File LUT annually to provide zero-rated international shipping services and claim ITC on vessel expenses.
7. Input Tax Credit (ITC) for Shipping Companies
ITC allows shipping companies to reduce tax liability by claiming credit for GST paid on business purchases. This is a significant benefit for companies with high operational costs.
| Particulars | Amount |
|---|---|
| Vessel maintenance & repairs @18% | ₹5,00,000 |
| GST paid on maintenance | ₹90,000 |
| Fuel & lubricants @18% | ₹8,00,000 |
| GST paid on fuel | ₹1,44,000 |
| Port charges @18% | ₹3,00,000 |
| GST paid on port charges | ₹54,000 |
| Crew expenses @18% | ₹2,00,000 |
| GST paid on crew expenses | ₹36,000 |
| Total ITC Available | ₹3,24,000 |
| GST collected on domestic shipping @18% | ₹4,00,000 |
| Net GST Payable | ₹76,000 |
Eligible ITC Items for Shipping Companies
Conditions for Claiming ITC – Section 16(2)
- Valid Tax Invoice: Must contain GSTIN, SAC, and tax amounts.
- Receipt of Goods/Services: Claim only after actual receipt.
- Tax Paid to Government: Supplier must have deposited the tax.
- Return Filing: Must be claimed in GSTR‑3B by the 20th of the following month.
Note: ITC claimed on zero-rated exports (international shipping) is eligible for refund under Section 54.
Takeaway: Claim ITC on vessel maintenance, fuel, port charges, and crew expenses to reduce your tax liability.
8. GST Returns Filing for Shipping Companies
| Return | Description | Due Date |
|---|---|---|
| GSTR‑1 | Outward supplies (sales) – including zero-rated exports | 11th of following month |
| GSTR‑3B | Summary return with ITC and payment | 20th of following month |
| GSTR‑9 | Annual return | 31 December |
| GSTR‑9C | Audit report (turnover > ₹5 crore) | 31 December |
| GSTR‑4 | Annual return for composition dealers | 30 June |
QRMP Scheme: Shipping companies with turnover up to ₹5 crore can opt for Quarterly Return Monthly Payment (QRMP).
Important: Zero-rated exports must be reported in GSTR‑1 as "Exports without payment of tax" and in GSTR‑3B as zero-rated supplies.
Takeaway: File returns on time to avoid late fees of ₹50 per day and interest on unpaid tax. Report zero-rated shipping services accurately.
9. Reverse Charge Mechanism (RCM) for Shipping Companies
Under the Reverse Charge Mechanism (RCM), the recipient of services is liable to pay GST instead of the service provider. For shipping companies, RCM is applicable in the following scenarios:
Takeaway: Identify all foreign shipping service invoices and pay GST under RCM on time to claim ITC.
10. Common GST Mistakes by Shipping Companies & Solutions
✅ Solution: Track annual turnover and register proactively.
✅ Solution: File LUT annually on the GST portal to avail zero-rating on international services.
✅ Solution: International shipping is zero-rated under LUT – charge 0% GST.
✅ Solution: Maintain all invoices and claim ITC in GSTR‑3B.
✅ Solution: Claim all ITC by 30 November of the following FY.
✅ Solution: Identify all foreign service invoices and pay GST under RCM on time.
Takeaway: Regular reconciliation, LUT filing, and proper documentation are the keys to error‑free compliance.
11. Penalties & Risks for Non‑Compliant Shipping Companies
Takeaway: File LUT for zero-rated international shipping and apply correct GST rates to avoid severe penalties.
12. Industry‑Specific GST Insights for Shipping Companies
Choose between 5% (no ITC) and 18% (with ITC) based on input costs. ITC available on vessel maintenance, fuel, and port charges.
Zero-rated under LUT – 0% GST on international freight. File LUT annually. Claim ITC refund on vessel expenses.
Domestic chartering at 18% GST with ITC. International chartering zero-rated under LUT. RCM applies on foreign services.
18% GST on port services with full ITC. Ensure correct invoicing for port charges and handling fees.
18% GST on ship management and agency services. ITC available on crew expenses, office rent, and professional services.
Domestic bunkering at 18% GST with ITC. International bunkering zero-rated under LUT.
Takeaway: Tailor your GST compliance based on your specific business model – coastal shipping, international shipping, or chartering.
13. Comparison: Coastal Shipping 5% vs 18% Rate Options
| Parameter | 5% GST (Without ITC) | 18% GST (With ITC) |
|---|---|---|
| GST Rate | 5% | 18% |
| ITC Availability | ❌ No | ✅ Yes |
| Compliance Burden | Lower (no ITC reconciliation) | Higher (ITC reconciliation required) |
| Best Suited For | Shipping companies with minimal inputs | Shipping companies with high input costs (fuel, maintenance, port charges) |
| Cash Flow Impact | Lower tax outflow | Higher tax outflow but ITC refund possible |
Takeaway: Evaluate your input cost structure before choosing between the 5% and 18% options for coastal shipping.