Import and Export

1. Impact of GST on Imports and Exports in India
In the pre-GST regime, the imports of goods and services were subject to multiple state and
federal levies such as customs duty, countervailing duty (equivalent to excise duty), and
special additional duty (equivalent to value added tax). The single integrated goods and
services tax (IGST) under the GST has replaced all these taxes.
The import of certain goods, however, continue to attract basic customs duty, education cess,
and other protective taxes, such as the anti-dumping duty and safe-guard duty, in addition to
the IGST.
Meaning of Import and Export of Goods under GST
Sub-Section 5 of section 2 of IGST Act, 2017 defines – “Export of Goods”, with its
grammatical variations and cognate expressions, means taking out of India to a place outside
India.
Sub-Section 10 of section 2 of IGST Act, 2017 defines – “import of the goods” with its
grammatical variations and cognate expressions, means bringing goods into India from a
place outside India.
Meaning of Import and Export of Services under GST
“Import of Services” as defined under sub-section 11 of section of IGST Act, 2017 means the
supply of any service, when –
The place of supply of service is in India
The supplier of service is located outside India;
The recipient of service is located in India; and
Supplies which do not form part of export of goods or services
Where the place of supply of service is within India but to a person located outside India.
For an instance – a property located in Delhi rented out to a person residing in New York;
agent residing in India and providing service to a person in Dubai exporting goods to China.
Where the consideration for the supply of services is received in Indian currency or in such
a currency other than convertible currency. For an instance, supply of service (consultancy
service) by a consulting firm in India to an entity outside India, where the payment made by
Indian branch of overseas entity is in Indian rupees.
Supply of services to the foreign branch would not be covered as export of services due to
specific exclusion as “export of service”. This could involve reversing the input credits as
such supply of service would be considered as non-taxable and not as zero-rated.
The definition of import of service given under GST also excludes services imported from a
foreign branch.
Deemed Exports under GST
Indian suppliers of services and manufacturers of goods have to quote in competition with
foreign suppliers of goods and services. Such Bids evaluation is done without considering the

2. customs duty. Since such supply of goods and services are financed for specific projects
(projects financed) with the free foreign exchange, these supplies are considered as ‘deemed
exports’.
Similarly, supplies made to Export Oriented Units also known as EOUs and services do not
leave the country. Suppliers get their payment in Indian currency and not in foreign
exchange.
“Deemed exports” generally refer to those transactions under which supply of goods do not
leave the country, and payment for such supplies is received in Indian Rupees shall be treated
as ‘deemed exports’, provided that goods are manufactured or produced in India.
Treatment of Exports under GST
As per the provisions contained under IGST law, export of goods or services or both are to be
regarded as “zero-rated supplies” and a person being a registered taxable person exporting
such goods or services or both shall be allowed to claim the refund of the GST paid under one
of the following two options:
Export of goods or services or both under bond or letter of undertaking (LUT) without
paying any Integrated Tax and can claim the refund of unutilized input credit.
Export of goods and service or both on the payment of Integrated Tax and the exporter can
claim the refund of the GST paid on such goods and services so exported. The above-
mentioned refunds will be subject to certain rules, procedures, and safeguards as may be
prescribed.
Integrated Goods and Services Tax
Imports under GST are treated as inter-state supply. Since GST is a destination-based tax,
Integrated Goods and Services Tax (IGST) is levied in the state where the imported goods are
consumed and imported services are received.
IGST can be paid using input tax credit of central goods and services tax (CGST), state goods
and services tax (SGST), and IGST. The input tax credit is the credit that dealers can avail for
taxes paid on their purchases, at the time of paying final tax on their sales.
In the case of CGST and SGST, no cross utilization of input tax credit is allowed. This means
that input tax credit of CGST can only be utilized for CGST and IGST, and an input tax
credit of SGST can only be utilized to pay for SGST and IGST.
Import of services under GST
Under GST, the import of service is taxable if –
The supplier of service is located outside India;
The recipient of service is located in India;
The place of supply of service is in India; and,
The supplier of service and the recipient of service are not merely establishments of a distinct
person.

3. Tax returns
An importer is required to file monthly tax returns under GST. Under the previous law, the
importer was required to file returns under state tax law for the purchase of goods (import of
goods) and under central tax laws for claiming countervailing duties. While filing monthly
returns, importers must declare the goods imported in table-5 of the GSTR-2 form, and
services imported in table-6 of the GSTR-2 form.
Exemptions
Previously, the transportation of goods by aircraft and inbound shipment was not liable to
service tax. Under GST, there is no such exemption.
Impact on exports
Under GST, exports are treated as ‘zero-rated supplies’. That is, supplies on which the GST
rate is fixed as zero. If GST is paid at any point of supply against exports from India, a trader
may either export without the payment of IGST under bond or letter of undertaking or may
pay the IGST and claim a refund later.
In both cases, an exporter must provide details of the GST invoices in the shipping bill. The
invoice must contain the following details:
Name, address, and GSTIN of the supplier;
Name and address of the recipient;
Invoice number and date;
HSN code of the goods along with description;
Total value and quantity of goods, and,
The signature of the supplier.
To claim the refund of IGST, the exporter can file the details of the tax paid, GST invoice,
and shipping bill in table 6A in the form GSTR-1 of the relevant month.
Impact of GST on Manufacturers, Distributor,
and Retailers
GST is a boost competitiveness and performance in India’s manufacturing sector.
Declining exports and high infrastructure spending are just some of the concerns of this
sector. Multiple indirect taxes had also increased the administrative costs for
manufacturers and distributors and with GST in place, the compliance burden has eased
and this sector will grow more strongly.
But due to GST business which was not under the tax bracket previously will now have to
register. This will lead to lesser tax evasion.

4. Impact of GST on Service Providers
As of March 2014, there were 12, 76,861 service tax assessees in the country out of which
only the top 50 paid more than 50% of the tax collected nationwide. Most of the tax
burden is borne by domains such as IT services, telecommunication services, the
Insurance industry, business support services, Banking and Financial services, etc. These
pan-India businesses already work in a unified market and will see compliance burden
becoming lesser. But they will have to separately register every place of business in each
state.
Sector-wise Impact Analysis
Logistics
In a vast country like India, the logistics sector forms the backbone of the economy. We
can fairly assume that a well organized and mature logistics industry has the potential to
leapfrog the “Make In India” initiative of the Government of India to its desired position.
E-commerce
The e-commerce sector in India has been growing by leaps and bounds. In many ways,
GST will help the e-com sector’s continued growth but the long-term effects will
be particularly interesting because the GST law specifically proposes a Tax Collection at
Source (TCS) mechanism, which e-com companies are not too happy with. The current
rate of TCS is at 1%.
Pharma
On the whole, GST is benefiting the pharma and healthcare industries. It will create a level
playing field for generic drug makers, boost medical tourism and simplify the tax
structure. If there is any concern whatsoever, then it relates to the pricing structure (as per
latest news). The pharma sector is hoping for a tax respite as it will make affordable
healthcare easier to access by all.
Telecommunications
In the telecom sector, prices will come down after GST. Manufacturers will save on costs
through efficient management of inventory and by consolidating their warehouses.
Handset manufacturers will find it easier to sell their equipment as GST has negated the
need to set up state-specific entities, and transfer stocks. The will also save up on logistics
costs.
Textile

5. The Indian textile industry provides employment to a large number of skilled and
unskilled workers in the country. It contributes about 10% of the total annual export, and
this value is likely to increase under GST. GST would affect the cotton value chain of the
textile industry which is chosen by most small medium enterprises as it previously
attracted zero central excise duty (under optional route).
Real Estate
The real estate sector is one of the most pivotal sectors of the Indian economy, playing an
important role in employment generation in India. The impact of GST on the real estate
sector cannot be fully assessed as it largely depends on the tax rates. However, the sector
will see substantial benefits from GST implementation, as it has brought to the industry
much-required transparency and accountability.
Agriculture
The agricultural sector is the largest contributing sector the overall Indian GDP. It covers
around 16% of Indian GDP. One of the major issues faced by the agricultural sector is the
transportation of agri-products across state lines all over India. GST will resolve the issue
of transportation.
FMCG
The FMCG sector is experiencing significant savings in logistics and distribution costs as
the GST has eliminated the need for multiple sales depots.
Freelancers
Freelancing in India is still a nascent industry and the rules and regulations for this chaotic
industry are still up in the air. But with GST, it will become much easier for freelancers to
file their taxes as they can easily do it online. They are taxed as service providers, and the
new tax structure has brought about coherence and accountability in this sector.
Automobiles
The automobile industry in India is a vast business producing a large number of cars
annually, fueled mostly by the huge population of the country. Under the previous tax
system, there were several taxes applicable to this sector like excise, VAT, sales tax, road
tax, motor vehicle tax, registration duty which will be subsumed by GST.
Startups
With increased limits for registration, a DIY compliance model, tax credit on purchases,
and a free flow of goods and services, the GST regime truly augurs well for the
Indian startup scene. Previously, many Indian states had different VAT laws which were

6. confusing for companies that have a pan-India presence, especially the e-com sector. All
of this has changed under GST.