Looking for expert help with GST and income tax for customs brokers and CHAs India? The team at Tax Garden, based in Kondapur, Hyderabad, helps Indian SMEs stay compliant. End-to-end filings, notices, and deadline tracking, all in one place.
Key Takeaways
- Customs broker (CHA) services are 18% GST under SAC 996712 (Notification 11/2017-Central Tax (Rate), S. No. 11(ii), 9% CGST). The rate did not change in the September 2025 GST rate revision.
- Customs duty, CFS and port charges you pay on the client's authority, in the client's name, stay out of your taxable value under Rule 33 of the CGST Rules, if you show them separately and recover the exact amount.
- Charges billed to you in your own name, on which you take credit, are part of your fee and carry 18%.
- Section 44AD bars "agency business" (Section 44AD(6)(iii) of the 1961 Act; Section 58(11)(a)(v) of the 2025 Act), so most CHAs should keep books and file on actual profit.
- Audited CHAs must file the AY 2026-27 return by 21 November 2026 (CBDT Circular 07/2026).
What is the GST rate on customs broker services? Customs clearance work by a licensed customs broker is taxed at 18% GST: 9% CGST plus 9% SGST, or 18% IGST for an out-of-state client. The SAC is 996712, "Customs House Agent services". The rate entry is heading 9967, S. No. 11, item (ii) of Notification 11/2017-Central Tax (Rate). Duty and charges paid as the importer's pure agent are excluded from value under Rule 33.
A clearance file looks simple from the outside: one bill of entry, one invoice. But your invoice usually carries four or five kinds of money. There's your agency fee, customs duty, CFS and terminal charges, shipping line charges, transport and sundry expenses. Each one has a different GST answer, and the wrong answer either overcharges the client 18% on duty or leaves you short in an audit. This guide covers the GST rules in force from 22 September 2025, and income tax for FY 2025-26 (AY 2026-27) under the Income-tax Act 1961, with the matching sections of the Income-tax Act 2025 that apply from 1 April 2026.
What GST rate and SAC code apply to customs clearance work?
18%, under SAC 996712. CBIC's Explanatory Notes describe this code as services by "a person licensed, temporarily or otherwise, under the regulations made under sub-section (2) of section 146 of the Customs Act, 1962, related to import or export of goods."
Comparison
GST Codes and Rates for a Customs Clearance Business
| What you bill | SAC | GST | Source |
|---|---|---|---|
| Customs clearance, bill of entry and shipping bill filing as a licensed customs broker | 996712 | 18% | Notif 11/2017-CT(R), S. No. 11(ii); CBIC Explanatory Notes |
| Clearing and forwarding or consignment agent work | 996713 | 18% | Notif 11/2017-CT(R), S. No. 11(ii); CBIC Explanatory Notes |
| Customs duty paid from or for the importer, shown separately | Not your supply | Excluded from value | Rule 33, CGST Rules (pure agent) |
| CFS, port or shipping line charges billed in the importer's name, recovered at actual | Not your supply | Excluded from value | Rule 33, CGST Rules |
| Charges billed to you in your own name and recovered from the client | Part of your fee | 18% | Section 15(2)(c), CGST Act |
Source: Notification 11/2017-Central Tax (Rate), S. No. 11 (heading 9967), unchanged by 15/2025-CT(R); CBIC Explanatory Notes to the Scheme of Classification of Services; CGST Act s.15; CGST Rules r.33
Serial number 11 has two items. Item (i) is for goods transport agencies (GTAs), defined as a person who provides services in relation to transport of goods by road and issues a consignment note. Item (ii) covers every other supporting service in transport, which is where customs agency work sits, at 9% CGST. Notification 15/2025-Central Tax (Rate), the services amendment that took effect on 22 September 2025, changed serial numbers 3, 7 to 10, 12, 15, 21, 24, 26, 32, 34, 35 and 38, but not 11.
If you also arrange road transport and issue your own consignment notes, that part of the work falls under the GTA rules instead. Our GST on freight and GTA guide explains them.
When do duty and port charges stay out of your GST value?
Section 15(2)(c) of the CGST Act adds "incidental expenses, including commission and packing, charged by the supplier to the recipient" to the value of your supply. Rule 33 of the CGST Rules is the exception. It excludes costs you incur "as a pure agent of the recipient of supply" when all three conditions hold:
Step-by-Step Guide
Rule 33 Test: Is This Recovery Outside Your Taxable Value?
1. The client authorised the payment
You pay the third party (Customs, a CFS, a terminal) on the importer's or exporter's authorisation. A clause in your engagement letter covers this.
2. It is shown separately on your invoice
Each recovery appears as its own line, apart from your agency fee. A single lump sum 'clearance charges' line fails this test.
3. It is on top of your own service
The third-party supply is in addition to the service you provide on your own account.
4. You meet the pure agent definition
You have a contract to act as pure agent, hold no title to what was bought, don't use it for your own interest, and recover only the actual amount.
Result
All four met: the recovery is a disbursement, outside your value of supply. Any one missing: it is part of your fee and carries 18% GST.
Source: Rule 33 and its Explanation, CGST Rules 2017; Section 15(2)(c), CGST Act 2017
The rule's own illustration is a corporate services firm that recovers the Registrar of Companies' fee from its client. The fee is compulsorily levied on the client, so the firm is only a pure agent. Customs duty works the same way: it's the importer's liability, assessed on the importer's bill of entry.
Example: you clear a consignment for a registered importer in another state. Your invoice shows:
- Agency fee: Rs 12,000.
- Courier and documentation charges that you incurred in your own name: Rs 1,500.
- CFS charges invoiced by the CFS to the importer's GSTIN, which you paid on the importer's authorisation: Rs 23,600.
Your taxable value is Rs 12,000 + Rs 1,500 = Rs 13,500. IGST at 18% is Rs 2,430. The invoice total is Rs 13,500 + Rs 2,430 + Rs 23,600 = Rs 39,530. Had you lumped the CFS charges into your fee, the client would pay 18% on Rs 23,600 again, Rs 4,248 of extra GST on a bill it has already paid tax on.
Where CHAs get this wrong. A CFS or shipping line often raises its invoice in the broker's name. If you claim input tax credit on it, you've used the service for your own interest, so it can't also be a pure agent recovery. Bill it as part of your fee with 18% GST, or ask the vendor to bill the importer directly. Pick one treatment per vendor and keep to it.
GST registration, place of supply and composition
Registration. Customs agency is a service, so the Rs 20 lakh registration limit in Section 22 of the CGST Act applies (Rs 10 lakh in some special category states), not the Rs 40 lakh limit for goods. Aggregate turnover under Section 2(6) is the "aggregate value of all taxable supplies", exempt supplies and exports. Pure agent recoveries are not part of the value of your supply, so on that reading they don't count towards the limit. Your fees do.
Example: a two-person clearance firm at a Hyderabad dry port bills Rs 17 lakh of agency fees and passes through Rs 1.6 crore of duty and CFS charges as pure agent. On the Section 2(6) reading, its aggregate turnover is the Rs 17 lakh of fees, below Rs 20 lakh. In practice, most importers and exporters will only work with a registered broker because they want a tax invoice for credit. Our GST registration service handles the application, and our turnover limit guide explains the count.
Place of supply. Where you and your client are both in India, Section 12(2) of the IGST Act decides it. For a registered client, it's the client's location. For an unregistered client, it's the client's address on record, or your location if there's no address. A Hyderabad broker clearing at Chennai port for a Bengaluru importer charges IGST, because the importer is in Karnataka. Where the client is outside India (a foreign exporter paying you for clearance in India), Section 13 of the IGST Act applies instead, and the answer depends on the exact service. Get that checked before you treat it as an export of services.
Composition is rarely open to you. The 6% scheme for service providers under Section 10(2A) of the CGST Act, read with Notification 2/2019-Central Tax (Rate), needs last year's aggregate turnover within Rs 50 lakh and no inter-State outward supplies. A single registered client in another state makes your supply inter-State under Section 12(2)(a). Most brokers serve importers from several states, so the scheme is out. Our composition scheme guide lists every condition.
Income tax for customs brokers
Section 44AD is a poor fit. Section 44AD(6) of the Income-tax Act 1961 says the presumptive scheme doesn't apply to "(ii) a person earning income in the nature of commission or brokerage; or (iii) a person carrying on any agency business." From 1 April 2026, Section 58(11)(a) of the Income-tax Act 2025 carries the same exclusions: an eligible assessee "(iv) does not earn any income in the nature of commission or brokerage; (v) does not carry on any agency business". Neither Act defines agency business. A customs broker is licensed to act for the importer or exporter before Customs, which is close to the plain meaning of agency. Declaring 6% or 8% and being told later that the scheme never applied is an expensive outcome, so plan on books.
Comparison
Books, Audit and Due Dates for a CHA (FY 2025-26, AY 2026-27)
| Rule | What it says | Income-tax Act 1961 | Income-tax Act 2025 (from 1 Apr 2026) |
|---|---|---|---|
| Books of account | Individual or HUF: income above Rs 2.5 lakh or turnover above Rs 25 lakh in any of the last 3 years | Section 44AA(2) | Section 62 |
| Tax audit | Turnover above Rs 1 crore; Rs 10 crore if cash receipts and cash payments are each within 5% | Section 44AB(a) | Section 63 |
| Presumptive tax | Not for agency business or commission income | Section 44AD(6)(ii), (iii) | Section 58(11)(a)(iv), (v) |
| Advance tax | 15% by 15 June, 45% by 15 Sept, 75% by 15 Dec, 100% by 15 March | Section 211(1)(a) | Section 408 |
| ITR due date, audit case | 21 November 2026 (extended) | Section 139(1); CBDT Circular 07/2026 | Not applicable to AY 2026-27 |
Source: Income-tax Act 1961 ss. 44AA, 44AB, 44AD, 139, 211; Income-tax Act 2025 s.58; CBDT Circular 07/2026 dated 28 Sep 2026
Whether pass-through duty and CFS charges count towards your Rs 1 crore or Rs 10 crore audit turnover isn't spelt out in Section 44AB. If your fees and reimbursements are received by bank transfer and your cash payments stay within 5%, the Rs 10 crore limit usually makes the question academic. If you handle cash, ask your accountant how to report the reimbursements before year end.
Example (proprietor, new tax regime, FY 2025-26): books show agency fee income of Rs 48 lakh and a net profit of Rs 14 lakh after staff, rent and the documentation team.
- Rs 0-4 lakh: nil.
- Rs 4-8 lakh at 5%: Rs 20,000.
- Rs 8-12 lakh at 10%: Rs 40,000.
- Rs 12-14 lakh at 15%: Rs 30,000.
- Tax: Rs 90,000. Income is above Rs 12 lakh, so there's no Section 87A rebate. Marginal relief doesn't help either, since Rs 90,000 is less than the Rs 2 lakh of income above Rs 12 lakh.
- Health and education cess at 4%: Rs 3,600. Total: Rs 93,600.
Tax Rate Chart
New Tax Regime Slabs, FY 2025-26 (AY 2026-27)
Up to Rs 4 lakh
Rs 4-8 lakh
Rs 8-12 lakh
Rs 12-16 lakh
Rs 16-20 lakh
Rs 20-24 lakh
Above Rs 24 lakh
Source: Section 115BAC(1A), Income-tax Act 1961, as amended by Finance Act 2025
TDS your clients deduct. No TDS entry mentions customs clearance by name, so importers read the contract. Some treat it as contract work: 1% for an individual or HUF broker, 2% for a firm or company, once a single bill exceeds Rs 30,000 or the year's total exceeds Rs 1,00,000 (Section 194C; Section 393(1), Table Sl. No. 6(i) of the 2025 Act). Others treat it as fees for technical services at 2% above Rs 50,000 a year (Section 194J; Section 393(1), Table Sl. No. 6(iii)). Large importers sometimes deduct on the whole invoice, reimbursements included. Whatever they do, the credit is yours to claim, so reconcile each client's deductions with Form 26AS and AIS every quarter, not in July.
TDS you deduct. When your firm hires trucks for a client's cargo and pays the transporter, Section 194C applies to you as payer, with an exemption for transporters who own ten or fewer goods carriages and give you a declaration with their PAN. Our TDS on freight guide covers the declaration, and our TDS filing service files the quarterly returns.
Deadlines right now. If your FY 2025-26 accounts were audited, the return is due by 21 November 2026 (CBDT Circular 07/2026). If you weren't liable to audit and missed 31 July or 31 August, a belated return under Section 139(4) can be filed until 31 December 2026, with a late fee of Rs 5,000, or Rs 1,000 if total income is within Rs 5 lakh (Section 234F).
Common mistakes customs brokers make
- One lump "clearance charges" line. Rule 33 needs each pure agent recovery shown separately. Merge them into your fee and the whole line is taxable at 18%.
- Taking credit and recovering at actual. If a CFS bill is in your name and you claim the credit, it isn't a pure agent cost. Tax the recovery with your fee.
- Charging CGST and SGST to an out-of-state importer. The place of supply is the registered client's location (Section 12(2)(a), IGST Act). Getting it wrong means paying IGST and then seeking back the CGST and SGST you already paid.
- Filing on 44AD. The agency business bar in Section 44AD(6)(iii) puts the scheme at risk. Keep books.
- Leaving TDS credit unclaimed. Clients deduct under different sections and on different bases. Reconcile 26AS and AIS client by client.
How Tax Garden helps customs clearance firms
We review your invoice template so pure agent recoveries are shown the way Rule 33 needs, fix the place of supply for out-of-state clients, and file your GST returns every month. Our accounting and bookkeeping service keeps client advances, duty payments and fees in separate ledgers, and at year end we file through our ITR filing service. For your clients' side of the shipment, see our guides to GST on imports and the bill of entry, IEC registration and GST on exports under LUT.
