Under the IGST Act’2017, Import of goods means act of bringing goods into the territorial boundaries of India from a place outside India.
Under the GST law, imports are treated as inter-state supplies, making them subject to Integrated GST (IGST) along with applicable customs duties.
As per Section 3(7) in The Customs Tariff Act, 1975:
[Any article which is imported into India shall, in addition, be liable to integrated tax at such rate, not exceeding forty per cent. as is leviable under section 5 of the Integrated Goods and Services Tax Act, 2017 on a like article on its supply in India, on the value of the imported article as determined under sub-section (8) [or sub-section (8A), as the case may be] [Substituted by Notification No. 18 of 2017, dated 4.5.2017]
Therefore, any goods imported into India from a place outside, attract customs duty as well as IGST on its import into India.
This brings us to many questions regarding the chargeability of GST, Registration, payment of Taxes on Import of Goods. We will try to answer these questions in this article.
Q. What are the duties/Taxes applicable on Import of Goods into India?
A. For importing goods into India, the following duties/taxes may be applicable:
1. Basic Customs Duty (BCD): Calculated as a percentage of the CIF value based on the applicable customs tariff rate.
2. Social Welfare Surcharge (SWS): Levied on the BCD at a standard rate
3. Integrated GST (IGST): IGST is calculated and paid as a specific percentage of the assessable value.
4. CIF Value includes Cost of the Goods, Insurance, Freight charges for transportation of goods.
5. Assessable value is the value derived by adding the CIF value, BCD, SWS, and other applicable duties or charges.
6. IGST Calculation: The assessable value is multiplied by the applicable GST rate to determine the IGST payable.
Total Tax liability in case of import of goods = BCD + SWS+ IGST
Therefore, the total cost of the imported goods Includes: CIF Value + BCD+SWS+ any other applicable duties + IGST
Example Calculation of the IGST and the import Cost would be something like as under:
- CIF Value: ₹10,00,000/-
- BCD Rate: 10% → ₹1,00,000/-
- SWS Rate: 10% of BCD → ₹10,000/
- Assessable Value: ₹10,00,000 (CIF) + ₹1,00,000 (BCD) + ₹10,000 (SWS) = ₹11,10,000/-
- IGST Rate: 18%
- IGST Payable: ₹1,11,000 × 18% = ₹1,99,800/-
Total Import Tax Liability = BCD + SWS + IGST = ₹1,00,000 + ₹10,000 + ₹1,99,800 = ₹3,09,800/-
Total Cost of Import = CIF + Total Tax Liability on import including custom duties and IGST = 10,00,000 + 3,09,800= 13,09,800/–
Q. Another question that comes to mind is how will these taxes be paid when we import goods into India?
A.The applicable duties/Taxes on Import of goods are paid at the time of Importing the goods into India on clearance such Imported Goods for home consumption at the ports by filing Bill of Entry with the custom authorities in India. Since, as per Section 3(7) of The Customs Tariff Act, 1975 any article which is imported into India shall, in addition, be liable to integrated tax even the IGST is paid at the time of clearance along with the custom duties as mentioned above.
Q. Whether GST Registration is required for payment of IGST on Import of Goods into India?
A. Generally, you may need GST registration in order to claim ITC of the IGST Paid at the time of Import of Goods into India.
Since IGST can be paid at the time of Import of Goods along with duties of custom therefore there may be no separate requirement to take GST registration for the payment of IGST on Import of Goods.
However, if the ITC for the IGST paid at the time of Import of Goods is to be claimed then you will need a GST registration in order to file the GST Return and claim the ITC in GSTR-3B.
ITC for the IGST can only be claimed for IGST Paid for business purposes i.e if the Import of Goods is related to the business and for business purposes.
ITC for IGST Paid in respect of Import of goods for personal use is not available for credit. Also, when there is import of Goods for personal purposes, No supply takes place under the IGST Act and since there is no supply, the importer is not liable to take GST Registration.
Therefore, it may be concluded that in ordinary circumstances GST registration is required only when ITC is to be claimed when the goods are imported for business purposes.
Q. Is there any exemption on payment of taxes/duties on import of Goods for personal purposes?
A. As such there is no blanket exemption on chargeability of duty/GST on import of Goods for personal purposes. Even the goods imported for personal use maybe chargeable to tax. However, there may be some exemptions on duty/GST subject to a few limits on some goods used for personal purposes.