Under the GST regime, both transfers of goods and services into India would be cared for as a way to obtain goods or services throughout inter-state trade getting the levy of IGST. So the transfer of goods or services will be cared for as regarded inter-state items and would be at the mercy of GST. In this specific article, we go through the applicability of GST on imports into India.
GST on Imported Goods
The GST Act has defined the transfer of goods as taking goods into India from overseas. Appropriately, all imports into India will be regarded as inter-state attracting IGST levy. As well as the IGST, the transfer would also be at the mercy of Customs Obligations. Thus, when goods are brought in into India, IGST would be employed on the worthiness of the products and gathered along with Excise Duty. The Customs Tariff Act, 1975 was already amended to give levy of designed taxes and the payment concession on imported goods, in expectation of the GST rollout.
While GST would be employed to imports as well as the Basic Customs Work, GST Payment Cess can even be levied on certain luxury and demerit goods under the products and Services Taxes (Payment to Expresses) Cess Function, 2017.
Amount of GST on Imported Goods
HSN (Harmonised System of Nomenclature) code has been used for the intended purpose of classification of goods under the GST program. Hence, the classification of that for Customs Responsibility goal and IGST computation goal would be harmonized.
The GST amount that should be paid on goods brought into the country depends on the assessed value as well as levied duties by the Customs Act, and other duties charged on the goods. The imported goods value for which purpose GST compensation Cess is levied would be, value accessible plus Basic Customs Duty levied under the Act, including other charges on the goods similar to that of the customs duty. Therefore, the paid IGST would not be included in the value for the computing GST Compensation cess.
How to calculate GST on Imports
- If the estimated value of goods imported into India is Rs. 100/-.
- Basic Customs Duty is 10% ad-valorem.
- Tax rate added is 18%.
Then IGST tax payable would be calculated as:
Assessable Value= Rs. 100/-
Basic Customs Duty (BCD) = Rs. 10/-
Value to levy IGST = Rs. 110/-
GST – Integrated Tax = 18% of Rs.110/- = Rs. 19.80
Total Taxes = Rs. 29.80
If the imported goods fall into the luxury goods category and the GST Compensation Cess is also applicable, then it would be charged on Rs. 110/-, since Compensation Cess is not charged IGST.
Paying GST for Imports
The Customs Act, 1962, movement of goods from a customs station can only be done after the Customs Duty, and the IGST tax is paid. Thus, the importer would need to pay the integrated tax while moving the goods from the customs station to the designated warehouse.
Goods Import Procedure under GST
Input Tax Credit for Imports
Input tax credit is open under the GST establishment to offset the after effect of indirect tax so that consumer gets to access GST. Input tax credit exists for unified tax charged on goods imported. Input tax credit of the IGST remitted at the period of import would be attributed to the importer and such can also be used by the taxpayer as Input Tax credit to pay for IGST liability on supplies.
Though input tax credit is open for the IGST, the same can’t be claimed for The Basic Customs Duty (BCD) which the importer pays.
