GST on import of goods and services

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gst on import of goods and services

Imports under GST

GST has subsumed the major indirect taxes, however, import duty such as Basic Customs duty, Education Cess, Anti-dumping duty, Safeguard duty, etc. will continue.

The additional duties of Customs i.e. the Countervailing Duty (CVD) and Special Additional Duty of Customs (SAD), would be replaced with the levy of Integrated Goods and Services Tax(IGST).

Duties at the time of import

IGST and GST Compensation cess will be levied on imports, it would be levied on cargo that would arrive on or after 1st July 2017 and on cargo which has arrived prior to 1st July but a bill of entry is filed on or after 1st July 2017.

Applicable rate & calculation of Duty

There are seven rates prescribed for IGST- Nil, 0.25%, 3% 5%, 12%, 18% and 28%. IGST rate on any product would depend on its classification. The IGST Rates of Goods, Chapter wise IGST rate, GST Compensation cess rates, IGST exemption is available on CBEC website. It is on the news that the Customs duty calculator would be made available on CBEC and ICEGATE website.

Valuation and method of calculation

IGST is leviable on the value of imported goods which would be calculated as the aggregate of-

1) The value of the imported article

2) Duty of customs

Changes in import procedures

Status of IEC

DGFT has notified that PAN would be the IEC. In the GST regime, GSTIN would be the key identifier at the transaction level for every import & export. It is also advised that all importers need to quote GSTIN in their Bills of Entry in addition to IEC. It is expected that in due course of time IEC would be replaced by PAN / GSTIN.

Refund of SAD paid on Imports

Dealers/ traders can take ITC of SAD paid on goods imported prior to 1st July 2017.

A registered person is also allowed to take credit for eligible duties in respect of inputs received on or after 1 July 2017 but the duty on which has been paid under the existing law.

To sum-up, SAD paid by dealers/ traders can be set-off against their GST liability as and when imported goods are supplied by them in the domestic market. However, certain items that are out of the GST net would be eligible for SAD refunds as earlier.

Imports & Input tax credit

The input tax credit of the integrated tax (IGST) and GST Compensation Cess shall be available to the importer and later to the recipients in the supply chain, however, the credit of basic customs duty (BCD) would not be available.

Following conditions must be met:

1) An importer should mandatorily declare the GST Registration number (GSTIN) in the Bill of Entry.

2) Invoice is made as per the applicable invoice rules

3) Form GSTR-2 is to be furnished by the importer.

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