Article 269A of the Constitution Of India 1949 mandates that the supply of goods, or of services, or both in the course of import into India shall be deemed to be supply of goods, or of services, or both in the course of inter-State Supply. In other words, import refers to bringing goods or services into a country from abroad for sale.
Import of Goods: The import of goods has been defined in the IGST Act, 2017 as bringing goods into India from a place outside India.
Import of Services: Import of Services as defined under IGST Act, 2017 refers to supply of any service where the supplier is located outside India, the recipient is located in India, and the place of supply of service is in India.
Treatment of import of goods under GST:
- Imports shall be deemed as inter-State supplies of both goods or services.
- IGST(Integrated Goods and Services Tax) and Compensation Cess to be charged at custom clearance of imported goods into India levied under the Customs Act, 1962
- In case of Services, IGST to be paid under GST of reverse charge basis levied under IGST Act, 2017.
- ITC(Input Tax Credit) allowed on IGST paid at the time of import on the basis of Bill of Entry(BOE).
- No ITC is allowed of Basic Custom Duty.
- Customs area includes warehouse also. Goods removed from custom station to warehouse shall not be treated as supply.
Place of Supply
In case of goods imported into India, the place of supply shall be the location of the importer.
Assessable Value of goods for calculating IGST & Compensation Cess
The value of the imported goods for the purpose of calculating IGST shall be:
Assessable value of goods mentioned in BOE + Customs Duty + any other duty chargeable on the said goods under any law for the time being in force.
- For Calculating the value of Compensation Cess, the IGST paid shall not be added to the assessable value.
- In cases where imported goods are liable to Anti-Dumping Duty or Safeguard Duty, value for calculation of IGST as well as Compensation Cess shall also include Anti-Dumping Duty amount and Safeguard duty amount.
- Passenger Baggage are exempted from IGST as well as Compensation Cess. However, Custom duty will be leviable.
Input Tax Credit under GST on import of Goods
Under the IGST Act, input tax is defined as IGST, CGST or SGST charged on any supply of goods and/or services. Thus, input tax credit of the IGST paid at the time of import shall be available to the importer and the same can be utilized by him as ITC for payment of taxes on his outward supplies. However, no ITC is allowed of Basic Custom Duty charged at the time of import.
Procedure of import of goods in India
- Obtain Import Export Code (IEC). DGFT in its Trade Notice No. 09 dated 12.06.2017 has stated that PAN would be the Import Export code (IEC). However, while PAN is identifier, GSTIN would be important for every import and export.
- Goods are said to be imported upon their arrival at the port or airport in India.
- File Bill of Entry and other documents to complete customs clearing formalities.
- Pay Custom Duty, IGST and other taxes charged by the authority.
- Goods are ready to be removed from the port or airport.