Unlocking the Secrets of GST Import: A Step-by-Step Guide

Importing goods into India can seem like a complex process, especially with the Goods and Services Tax (GST) introduction in 2017. This blog aims to simplify the process for you, explaining import under the GST Act in layman’s terms.

What is Import under GST?

Before the GST, import was governed by various taxes like customs duty, service tax, and VAT. GST streamlined things by bringing these taxes under one umbrella. Now, when you import goods, you pay an integrated tax (IGST) instead of multiple levies.

Who pays IGST?

The importer responsible for clearing goods through customs is obligated to pay the IGST. This could be the importer, their agent, or a designated customs broker.

The point when IGST is levied on imported goods?

Under the Goods and Services Tax (GST) regime in India, the integrated tax (IGST) on imported goods is levied at the point when duties of customs are levied on those goods under the Customs Act, of 1962. This means that the IGST becomes payable simultaneously with the customs duty.

Calculating IGST liability:

the taxable value for levying IGST on imported goods is defined under the Customs Act, 1962, and the Integrated Goods and Services Tax (IGST) Act, 2017. It includes the following components:

1. Assessable value: This is the value determined by customs authorities based on the transaction value or other prescribed methods. It typically includes the following:

Price actually paid or payable for the goods: This includes any discount or commission allowed.
Cost of insurance: This covers insurance against loss or damage during transit.
Cost of freight: This includes all transportation costs incurred until the goods arrive at the customs port.

2. Basic Customs Duty (BCD): This is a duty levied on imported goods under the Customs Tariff Act, of 1975.

3. Other charges: These can include:

Anti-dumping duty: This is levied to protect domestic industries from unfair competition from imported goods.
Countervailing duty: This is levied to counter subsidies given by exporting countries to their producers.
Safeguard duty: This is imposed to protect domestic industries from sudden surges in imports.
Customs handling charges;
Terminal handling charges;
Other port charges.

Therefore, the taxable value for IGST = Assessable value + BCD + Other charges.

IGST = Taxable value of goods * GST rate

The taxable value includes the price of goods, insurance, freight, and any other charges incurred till arrival at the Indian customs port. The current GST rate for most imports varies between 5% and 28%.

Example:

Price of imported goods: Rs. 100,000

Insurance cost: Rs. 5,000

Freight cost: Rs. 10,000

BCD: Rs. 20,000

Other charges: Rs. 5,000

Taxable value = 100,000 + 5,000 + 10,000 + 20,000 + 5,000 = Rs. 140,000

Steps involved in Import under GST:

Obtain an Importer Exporter Code (IEC): This is mandatory for anyone importing or exporting goods from India.
File Bill of Entry (BoE): This document details the imported goods, their value, and other relevant information.
Pay IGST: This can be done online or through authorized banks.
Clear Customs: Once the IGST is paid and documents are verified, customs release the goods for import.
File GST Returns: The importer must file GST returns online, mentioning the IGST paid and other relevant details.

IGST vs. Customs Duty:

While IGST is a tax under GST, customs duty is a separate tax levied on imports. Both are payable at the time of customs clearance.

Benefits of Import under GST:

Simplified tax structure: GST replaces multiple taxes with a single levy, making it easier to calculate and comply with.
Reduced compliance burden: Online filing of documents and payment of taxes streamlines the process.
Transparency: The online system provides greater transparency and accountability.
Improved logistics: GST eliminates the need for the movement of goods across states for taxation, leading to faster deliveries.

Disclaimer:

The information provided in this content is for general informational purposes only. You should always seek the advice of an expert before making any decisions based on the information provided. We do not warrant or guarantee the accuracy, completeness, or usefulness of the information provided. Any reliance you place on such information is strictly at your own risk. We are not responsible for any damages, losses, or expenses related to the use of this content.

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