Saudi Gazette

Jeddah — Indian expatriates returning home on final exit visas amid job uncertainty and rising cost of living in the Kingdom are now experiencing an unexpected shock in the form of the Goods and Services Tax (GST), the newly introduced tax system in India.

Thanks to GST, cargo charges have been doubled.

Shipments sent to India prior to the introduction of the new tax system are also held up at customs warehouses at airports in India because officials are demanding revised tariff under GST.

An approximately 500 tons of goods sent from Saudi Arabia are held up at various airports in India since July 1 when the GST was introduced, sources said.

Cargo facilities at airports in Jeddah, Riyadh and Dammam are also having a backlog load, said the sources.

The freight delivery duration has also increased from two weeks to a month and more.

“As a result of the sudden imposition of GST, 90 tons of cargo goods sent by our agency a month ahead of July 1 are also held up at Indian airports,” Abdul Rasheed, manager of a leading door-to-door delivery cargo service in Jeddah, told Saudi Gazette.

As a result we are collecting GST charges from customers here, he said.

He expressed concern that if they delayed in paying GST, airport warehouses will impose demurrage charges on them.

Indian expatriates have been using door-to-door cargo services across the Kingdom for sending goods, mostly used items, to home country as gift items. Since 1993 India has allowed the shipment of gift items and goods (not electronics, gold jewelry or any other prohibited items) for personal use assessed worth up to Rs20,000 from abroad with the exemption of customs duty and any tax.

This was helpful for many returning Indians. But this exemption was nullified in an overnight decision just a day prior to GST and brought under tax ambit.

As per new rules effective from July1, 41% tax has been imposed on goods sent as personal gift items. The tax comprises 10% customs duty, 3% education cess and 28% GST (the highest GST slab).

“I do not want to pay 41% GST for used towels, bed linen and kitchen utensils,” said a housewife, who is planning to return home for good.

Mohammed Yousuf, president of Telugu Association of Jeddah (TAJ), questioned the logic behind reducing the exemption limit for goods under transfer of residency in the new GST slab.

“When gift items given by employers to their employees worth up to Rs50,000 per year are exempted under GST then why exemption limit on shipped gift items was reduced from Rs20,000 to merely Rs2,000,” questioned Yousuf.

Abdulaziz, manager of a leading door-to-door cargo service in Jeddah, said that business has been affected since the introduction of GST.