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Imports of Goods or Services Under GST Regime

What are Imports under GST?

  • The import of goods has been defined in the IGST Act, 2017 as bringing goods into India from a place outside India.
  • Import of goods or services will be treated as deemed inter-State supplies and would be subject to Integrated tax in addition to the applicable Custom duties.

Levy

  • IGST on import of services would be levied under the IGST Act.
  • Levy of the IGST on import of goods would be levied under the Customs Act, 1962 read with the Custom Tariff Act, 1975.

Who is liable to pay?

  • The importer of services will have to pay tax on reverse charge basis.
  • But, in respect of import of online information and database access or retrieval services (OIDAR) by unregistered, non-taxable recipients, the supplier located outside India shall be responsible for payment of taxes.
  • For this purpose, either the supplier will have to take registration or will have to appoint a person in India for payment of taxes.

Assessable value for Imports of Goods

  • Goods which are imported into India shall, in addition to the Basic Customs duty, be liable to integrated tax at such rate as is leviable under the IGST Act, 2017 on a similar article on its supply in India.
  • The value of the goods for the purpose of levying integrated tax shall be, assessable value plus Customs Duty levied under the Customs Act.
  • In addition, GST compensation cess, may also be leviable on certain luxury and demerit goods under the Goods and Services Tax (Compensation to States) Cess Act, 2017 on the assessable value plus BCD.

Let’s take an example:

Suppose the assessable value of an article imported into India is Rs. 100/-. Basic Customs Duty is 10% ad valorem. Integrated tax rate is 18%.

The taxes will be calculated as under:

  • Assessable Value= Rs. 100/-
  • Basic Customs Duty (BCD) = Rs. 10/-
  • Value for the purpose of levying integrated tax= Rs. 100/- + Rs.10/-= Rs. 110/-
  • Integrated Tax = 18% of Rs.110/- =Rs. 19.80
  • Total taxes = Rs. 29.80

In case the goods are also leviable to cess under the Goods and Services Tax (Compensation to States) Cess Act, 2017, the same would be levied on Rs. 110/-.

Input tax credit of integrated tax paid under Imports

  • Input tax credit of the integrated tax paid at the time of import shall be available to the importer and the same can be utilized by him as Input Tax credit for payment of taxes on his outward supplies.
  • The Basic Customs Duty (BCD) shall not be available as input tax credit.
  • The place of supply of goods, imported into India shall be the location of the importer. For eg:- if an importer is located in Rajasthan, the state tax component of the integrated tax shall accrue to the State of Rajasthan.

Import of Services

  • In general, import of services under consideration, whether or not in the course or furtherance of business, shall be considered as a supply. Business test is not required but consideration test is required to be fulfilled for import of service to be considered as supply.
  • Import of services by a taxable person from a related person or from a distinct person as defined in Section 25 of the CGST Act, 2017, in the course or furtherance of business shall be treated as supply even if it is made without any consideration. Thus ,in this case, Business test is required but consideration test is not required to be fulfilled for import of service to be considered as supply.

Summary in Table

Nature of Service

Consideration

Business Test

Import of services

Necessarily Required

Not required

Import of services by a taxable person from a related person or from a distinct person

Not required

Necessarily Required

 

Section 21 of  IGST Act, 2017:

  • Imports of services made on or after the appointed day i.e. 1st July,2017 will be liable to integrated tax regardless of whether the transactions for such import of services had been initiated before the appointed day.
  • If the tax on such import of services had been paid in full under the existing law, no tax shall be payable on such import under the IGST Act.
  • In case the tax on such import of services had been paid in part under the existing law, the balance amount of tax shall be payable on such import under the IGST Act.

For instance, suppose a supply of service for Rs. 1 crores was initiated prior to the introduction of GST, a payment of Rs. 20 lacs has already been made to the supplier and service tax has also been paid on the same, the. integrated tax shall have to be paid on the balance Rs. 80 lacs.

Comments 18

sibin

December 13, 2017

goods purchased in October and received in Nov how will take ITC in gst 3b

CA Ruchika Tulsyan

December 18, 2017

show it as purchase of november.

kaushal mehta

March 21, 2018

i have a very big doubt
i have import goods and customs official charged me 18% gst on stationery items which are taxable @ 5% and 12% , NOW i have send it for reverification for customs and am sure they will revise the rates at 5% and 12% ………..
so 1) i filed a nil return this month as the due date was yestrday and i dint know what to do
@) can i show in nex month after the customs accept revision or should i show at the current excessive rates customs dept have attached?

Aparna kulshreshtha

January 17, 2018

Dear sir
If I import recycled plastic what will be my custom duty and GST?
Regards Aparna

ASHOK KHADE

January 24, 2018

I want to purchase service from south africa and service provider is not register in that transaction Do have to pay the GST ( 18% ) in RMC in India?

CA Ruchika Tulsyan

January 27, 2018

You need to pay IGST

Vijay

February 24, 2018

I made import of metal scrap
Custom and IGST paid by assessment value
But actually material value is low
Can I refund unused balance tax .?
If yes then how I can make refund procedure on imported goods?

Reddy

March 7, 2018

To,
CA Ruchika Tulsyan,

We are merchant exporters, we had exported bulk drugs 20.09.2017 to out side of India, and we received a quality complaint for the material. so that we are re importing the material. What is tax? is their any exemptions for merchant exporters? Invoicing details/Cerdit Debit Note.

Reddy

March 8, 2018

We are merchant exporters, we had exported bulk drugs 20.09.2017 to outside of India, and we received a quality complaint about the material. so that we are re-importing the material. What is the tax? is their any exemptions for merchant exporters? Any document issued to manufacturer from my side (supplementary Invoice, Credit/ Debit Note). Kindly reply

Richa

March 19, 2018

We are a sez unit. We have sold some goods to DTA. Which table in gstr1 we should show these sales to DTA. Whether this will be shown as outward supplies attracting reverse charge? As per IGST act only import of services are treated as outward supplies attracting reverse charge. Please suggest how to report supply of goods to DTA by us in gstr1

SATHIS KUMAR

March 29, 2018

bill of entry date:28/02/2018
IGST paid date : 02/03/2018
for in this case what date is time of supply of imported goods under GST ?

pls clarify ITC of IGST paid to be included in the month of FEB’18 or MArch’18 ?

Sreepada H.R., Cost Accountant, Bengaluru

June 18, 2018

You must have received the goods in the month of March only. Hence you will have to take ITC of IGST paid on Imports in the month of March & not February.

KESHAV

April 17, 2018

without consideration import of goods can be levied IGST ?

prashant

May 12, 2018

i have take imported goods cenvat in ITC other column by mistake , please suggest us how to correct the mistake,

Krishna

June 13, 2018

Hi CA Ruchika,

I am Indian company based in Delhi, and plan to use UK company to provide services to me, when I make payment to them do should I charge them TDS and or IGST? UK company told me that they will supply “UK residency certificate from UK HMRC”, and I need to submit this certificate to Indian Income Tax Authorities, which will confirm that UK company will pay taxes in UK and based on double taxation treaty my company will not have to pay GST and or IGST.

Bipin

June 18, 2018

We imported the goods we paid custom duty & IGST payment under custom, should i pay the invoice value to the party after 180 days.

karan

July 19, 2018

I have imported goods and paid custom duty and IGST and have Bill of entry also, and question is that whether i need to mention this IGST amount in GSTR-3B Under “Inward supply reverse charge” and input need to be claimed for the same simuntaneously?

Shaikh ibrahim

October 8, 2018

I will be importing milk powder from other country thru courier small packets every week
Tell me do I need to pay customs duty on there exporter behalf
How much GST applicable