Under GST, imports into India will be treated as inter-state supplies subject to Integrated Goods and Services Tax (IGST) in addition to basic customs duty and other surcharges. IGST will be charged on the transaction value of imports rather than the current MRP valuation method. Tax paid during import will be available as input tax credit to offset future GST liabilities unlike the current system where refund of certain duties is required. Many current import tax exemptions may be withdrawn or limited to basic customs duty exemptions only without IGST exemption, significantly changing the viability of key export schemes. Upon import, the IGST must be paid before goods can be removed from customs, and this IGST paid is eligible to be

1. Author : Sandeep Rathod Page 1
Below are some of the implications for imports and importers by
virtue of GST implementation in India:
• Import as Inter-State Supply – Import into India will be considered as Inter-
State supply under Model GST Law and accordingly will attract Integrated
Goods and Services Tax (IGST) along with BCD and other surcharges.
• Import of Services – Model GST law accord liability of payment of tax on the
service receiver, if such services are provided by a person residing outside
India. This is similar to the current provision of reverse charge, wherein
service receiver is required to pay tax and file return.
• Transaction Value based Valuation Principal – Model GST law has
borrowed the concept of transaction value based valuation principal from
current customs law for charging GST. This will have implication at the time of
tax liability determination as currently CVD is charged on MRP valuation
principle. Under the new regime IGST which subsumes CVD will be charged
on transaction value. This may also require working capital restructuring. This
may also reveal the margin of Service Provider which is currently not the
case.
• Refund of Duty – Under the new law, tax paid during import will be available
as a credit under “Import and Sale” model, whereas no such credit is available
presently. Also refund of SAD which is available now, after doing specific
compliance, no such restrictions are placed under GST.
• Withdrawal of Current Exemptions – The current customs import tariff is
loaded with multiple exemption notifications which are likely to reviewed and
possibly withdrawn or converted into a refund mechanism. This could mean
change in the structure of export-linked duty exemption schemes under the
FTP where the duty exemptions may get limited to exemption from payment
of BCD, while IGST may not be exempted. Withdrawal of exemptions or
changing them to refund mechanism could fundamentally change the
attractiveness and viability of some of the key schemes under the FTP like
EOU, STP, Advance authorization etc.

2. Author : Sandeep Rathod Page 2
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.