Imported Goods – Applicable GST, Customs Duty, and Cess

Under the GST regime, both the import of goods and or services into the territory of India would be treated as supply of goods or services in the course of inter-state trade attracting the levy of IGST. So import of goods or services will be treated as deemed inter-state supplies and would be subject to GST. In this article, we look at the applicability of GST on goods imported into India.

Amount of GST on Imported Goods

HSN (Harmonised System of Nomenclature) code has been used for the purpose of classification of goods under the GST regime. Hence, the classification of the item for Customs Duty purpose and IGST calculation purpose would be harmonised.

The amount of GST payable on imported goods would be dependent on the assessable value plus customs duty levied under the Customs Act, and any other duty chargeable on the goods. The value of the imported article for the purpose of levying GST Compensation cess would be, assessable value plus Basic Customs Duty levied under the Act, and any sum chargeable on the goods in the same manner as a duty of customs. Thus, the IGST paid would not be added to the value for the purpose of calculating GST Compensation cess.

Calculating GST on Imports

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

Then IGST tax payable would be calculated as:

Assessable Value= Rs. 100/-
Basic Customs Duty (BCD) = Rs. 10/-
Value for the purpose of levying IGST = Rs. 110/-
GST – Integrated Tax = 18% of Rs.110/- = Rs. 19.80
Total Taxes = Rs. 29.80

If the goods are luxury products and GST Compensation Cess is also applicable, then GST Compensation Cess would be levied on Rs. 110/-, as Compensation Cess is not levied IGST.

Paying GST for Imports

Under The Customs Act, 1962, removal of goods from a customs station can be done only after payment of Customs Duty and the Integrated GST tax payable. Thus, the importer would be required to pay the Integrated tax at the time of removal of goods from a customs station to a warehouse.

Input Tax Credit for Imports

Input tax credit is available under the GST regime to set off the cascading effect of indirect tax and ensure that the consumer bears GST. Input tax credit is also available for integrated tax charged on import of goods. Input tax credit of the IGST paid at the time of import would be credited to the importer and the same can be utilized by the taxpayer as Input Tax credit for payment of IGST liability on outward supplies.

Though input tax credit is available for the IGST paid, input tax credit cannot be claimed for The Basic Customs Duty (BCD) paid by the importer.

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