Input Tax Credit for Imports

Under the GST regime, the input tax credit is provided for the IGST and

GST Compensation Cess paid during the import of goods into India. From 1st July 2017, after the implementation of GST, all imports of goods into India would be treated as inter-state supply. Hence, IGST would be applicable. In this article, we look at the input tax credit for imports in detail.

GST Registration is Required for Importers

From 1st July 2017, the procedure for importing goods into India is set to change with the implementation of GST. The new GST Bill of Supply requires the GSTIN of the importer for levying IGST, GST Compensation Cess and tracking input tax credit. Hence, all importers would be required to obtain

GST registration before arrival of goods into India.

Filing GST Bill of Entry

Once, GST is implemented, the Bill of Entry would change to take on record the importers GST. Importers having GSTIN can mention GSTIN on the bill of entry. Importers having provisional GSTIN can mention the provisional GSTIN on the GSTIN. All goods arriving in India from 1st July, 2017 would have to comply with the new regulations and pay IGST and GST Compensation Cess as applicable.

Filing GST Bill of Entry

IGST Calculation for Imports

IGST and GST compensation cess is levied on the value of the imported goods. Value of imported goods is the aggregate of:

Value of imported article as determined under the Customs Act, 1962
Duty of Customs chargeable on that article under Customs Act, 1962 and any sum chargeable on that article under any law for the time being in force as an addition to.

Further, value of imported goods used for calculating GST compensation cess and IGST would also include education cess or higher education cess as well as anti-dumping and safeguard duties. However, IGST is not added to the value for the purpose of calculating GST compensation Cess. Although BCD, Education Cesses and IGST would be applicable in majority of cases, for some products CVD, SAD or GST Compensation cess may also be applicable. (Know more about

different types of customs duty) The procedure for calculating IGST on imports and GST compensation cess is shown in the illustration below:

IGST on Imports - Calculation Methodology

Input Tax Credit for Imports

Input tax credit of the integrated tax (IGST) and GST Compensation Cess is made available to the importer and later to the recipients in the supply chain. In order to avail input tax credit of IGST and GST compensation cess, an importer has to mandatorily declare GST Registration number (GSTIN) in the Bill of Entry. Further, GSTR-2 must be filed by the importer along with GST tax invoice and other relevant documents for claiming input tax credit. Its important to note that Basic Customs Duty (BCD) paid cannot be claimed as input tax credit.

Know more about GST in India at the IndiaFilings GST Portal.

Import Export Code

The Import Export Code is a primary document necessary for commencing Import-export activities. The IE code is to be obtained for exporting or importing goods or services. IEC has numerous benefits for the growth of the business. Indeed, you cannot ignore the necessity of IE code registration, as it is mandatory. You can apply for an Import Export code through

IndiaFilings and obtain it within 6 to 7 days.

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Frequently Asked Questions

Common questions about Input Tax Credit for Imports.

After the implementation of GST from July 1, 2017, all importers are required to obtain GST registration before the arrival of goods into India. The new GST Bill of Supply requires the GSTIN (GST Identification Number) of the importer for levying IGST, GST Compensation Cess, and tracking input tax credit. Having a valid GSTIN is mandatory for importers to comply with the new GST regulations.

The value of imported goods for calculating IGST and GST Compensation Cess is the aggregate of the value of the imported article as determined under the Customs Act, 1962, the duty of customs chargeable, and any other sum chargeable as an addition. This value also includes education cess, higher education cess, anti-dumping duties, and safeguard duties, but excludes the IGST amount itself.

No, importers cannot claim input tax credit for the Basic Customs Duty (BCD) paid on imported goods. The input tax credit is available only for the Integrated GST (IGST) and GST Compensation Cess paid during the import of goods into India.

To claim input tax credit on imported goods, the importer must mandatorily declare their GST Registration number (GSTIN) in the Bill of Entry. Additionally, the importer has to file GSTR-2 (a monthly return for inward supplies) along with the GST tax invoice and other relevant documents.

Yes, importers having a provisional GSTIN can mention it on the Bill of Entry while importing goods under the GST regime. However, it is advisable to obtain a regular GSTIN as soon as possible to avoid any potential complications or delays in the import process.

The IGST on imported goods is calculated based on the value of the imported goods, which includes the value of the article determined under the Customs Act, 1962, customs duty, and other applicable charges. The IGST rate is then applied to this value to determine the IGST amount payable.

The Import Export Code (IEC) is a primary document necessary for commencing import-export activities in India. Obtaining an IEC is mandatory for importing or exporting goods or services. It has numerous benefits for the growth of a business involved in international trade.

Yes, importers can claim input tax credit for the GST Compensation Cess paid during the import of goods into India, along with the Integrated GST (IGST). The input tax credit for both IGST and GST Compensation Cess is available to the importer and later to the recipients in the supply chain.

To claim input tax credit on imported goods under GST, the importer must have a valid GSTIN mentioned in the Bill of Entry. Additionally, the importer needs to file GSTR-2 (a monthly return for inward supplies) along with the GST tax invoice and other relevant documents supporting the import transaction.

Yes, the value of imported goods used for calculating IGST and GST Compensation Cess includes anti-dumping duties and safeguard duties, in addition to the value of the imported article, customs duty, education cess, and higher education cess. However, the IGST amount itself is not included in the value for calculating GST Compensation Cess.