Is GST Applicable on Imported Goods?

Under the

GST regime, both the import of goods and or services into the territory of India would be treated as supply of goods or services in the course of inter-state trade attracting the levy of IGST. Hence, GST on imports will be treated as deemed inter-state supplies and would be subject to GST. In this article, we look at the applicability of GST on goods imported into India.

GST on Import of Goods

The GST Act defines the import of goods as bringing goods into India from abroad. Accordingly, the GST Act considers all imports into India as inter-state attracting IGST. In addition to the IGST, the import would also be subject to Customs Duties. Thus, when goods are imported into India, IGST would be applied to the value of the goods and collected along with Customs Duty. The Customs Tariff Act, 1975 has already been amended to provide for levy of integrated tax and the compensation cess on imported goods, in anticipation of the GST rollout. While GST applies to imports in addition to the Basic Customs Duty, GST Compensation Cess shall levy on certain luxury and demerit goods under the Goods and Services Tax (Compensation to States) Cess Act, 2017.

Learn about the difference between IGST, CGST and SGST

Amount of GST on Imported Goods

HSN (Harmonised System of Nomenclature) code has been used for the purpose of classification of goods under the GST regime. Hence, the classification of the item for Customs Duty purpose and IGST calculation purpose would be harmonised. The amount of GST payable on imported goods would be dependent on the assessable value plus customs duty levied under the Customs Act, and any other duty chargeable on the goods. The value of the imported article for the purpose of levying GST Compensation cess would be, assessable value plus Basic Customs Duty levied under the Act, and any sum chargeable on the goods in the same manner as a duty of customs. Thus, the GST Compensation cess shall exclude the IGST paid while the calculating value.

Calculating GST on Imports

The assessable value of goods imported into India shall apply at the value for Rs.100.
Basic Customs Duty is 10% ad-valorem.
The integrated tax rate shall apply at the rate of 18%.

Then calculation for IGST tax payable shall apply at: Assessable Value = Rs.100 Basic Customs Duty (BCD) = Rs.10 Value for the purpose of levying IGST = Rs.110 GST-Integrated Tax =18% of Rs.110/- = Rs.19.80 Total Taxes = Rs.29.80 For goods such as luxury products and if the GST Compensation Cess applies, then GST Compensation Cess shall levy at the value of Rs.110/-, as Compensation Cess is not levied IGST.

Paying GST for Imports

Under The Customs Act, 1962, removal of goods from a customs station can be done only after payment of Customs Duty and the Integrated GST tax payable. Thus, the importer should pay the Integrated tax at the time of removal of goods from a customs station to a warehouse.

Goods Import Procedure under GST

Input Tax Credit for Imports

The input tax credit shall apply under the GST regime to set off the cascading effect of indirect tax and ensure that the consumer bears GST. The integrated tax also applies for the Input tax credit on import of goods. The importer shall receive the Input tax credit of the IGST paid during the time of import. Further, the taxpayer can utilize the as Input Tax Credit for payment of IGST liability on outward supplies. Though input tax credit applies for the IGST paid, the input tax credit remains unclaimable for The Basic Customs Duty (BCD) paid by the importer.

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Frequently Asked Questions

Common questions about GST on Imported Goods.

The GST rate applicable on imported goods is the Integrated GST (IGST) rate. The IGST rate is the same as the sum of CGST and SGST rates for intra-state supplies of the same goods or services. The exact IGST rate depends on the HSN code of the imported goods.

The IGST amount is calculated on the assessable value of the imported goods plus the Basic Customs Duty (BCD) levied. For example, if the assessable value is Rs. 100, BCD is 10%, and IGST rate is 18%, then the IGST payable is 18% of (Rs. 100 + Rs. 10) = Rs. 19.80.

Yes, the Basic Customs Duty (BCD) levied on imported goods is included in the base for calculating the IGST amount. However, for the purpose of GST Compensation Cess, the base excludes the IGST amount.

Yes, importers can claim Input Tax Credit (ITC) for the IGST paid on imported goods. This ITC can be utilized for payment of their IGST liabilities on outward supplies.

No, Input Tax Credit is not available for the Basic Customs Duty (BCD) paid on imported goods under the GST regime.

The IGST on imported goods is payable at the time of removal of goods from the customs station or warehouse. The goods cannot be cleared from customs without paying the applicable IGST and Customs Duty.

Yes, GST Compensation Cess is applicable on certain luxury or demerit goods imported into India, in addition to the IGST and Basic Customs Duty. The Cess is levied on the assessable value plus Basic Customs Duty.

The classification of goods for the purpose of import duty and IGST calculation is harmonized and based on the Harmonised System of Nomenclature (HSN) code assigned to the goods.

No, Input Tax Credit is not available for the GST Compensation Cess paid on imported goods under the GST regime.

Yes, IGST is also payable on services imported into India, as imports of services are treated as inter-state supplies under the GST regime.