Impact of GST on Imports in India


Under the umbrella of GST regime, the import of goods and products will not be affected by charges such as education cess, safeguard duty, basic customs duty, anti-dumping duty, and other charges.  

The Integrated Goods and Services Act, of 2017, explains the import of goods as bringing commodities from overseas into India. IGST will be applicable to all imported goods along with customs duties as applicable.

The import industry is already witnessing a major change towards a smoother transition; however, the government avoids immediate change management for companies.

India is one of the fastest-growing economies in the world and the country is on its way to becoming the new global manufacturing hub.

Article 269A of the GST regime states that the delivery of commodities if imported into India, may be taken into consideration as delivery below inter-nation trade or change and could appeal to included tax. For instance, if the assessable price of a commodity imported into the USA is Rs.500, primary customs responsibility is 10%, and the included tax fee levied is 18%, the taxes will be computed withinside the following manner:

Assessable Value = Rs.500

Basic Customs Duty = Rs.50

Value for the levy of integrated tax = Rs.500 + Rs.50 = Rs.550

Integrated Tax = 18% of Rs.550 = Rs.99

Overall Taxes = Rs.50 + Rs.99 = Rs.149

Indian Economy and ForeignTrade: While manufacturing activities are increasing, we are also seeing the expansion of foreign trade, both imports and exports. some. Continuing our agenda, we now expand our discussion of the impact of GST on imports and importers’ activities. 

GST will include Countervailing Duty (CVD) and Special Additional Tax (SAD), under the GST Model Law, however, the Basic Customs Duty will continue to apply to import invoices. BCD is already outside the scope of GST and will only be charged in accordance with applicable law. 

Here are some of the implications for importers and importers of India’s GST implementation: 

Imports as Interstate Sourcing –Imports into India will be treated as interstate sourcing under the GST Model Law and will, therefore, be subject to Integrated Goods and Services Tax (IGST) as well as BCD and other surcharges. 

Import of Services –The GST Model Law places the responsibility for paying taxes on the recipient of services, if those services are provided by a person residing outside of India. This is similar to the current reverse charge provision, in which the service recipient must pay taxes and file a return. 

Transaction Value Pricing Principle –The GST Model Law borrows the concept of transaction value pricing principle from the applicable customs law to calculate GST. This would make sense when determining tax liability, as CVDs are currently charged under the MRP pricing principle. Under the new regime, IGST, including CVD, will be charged according to the value of the transaction. It may also require a working capital restructuring. It can also reveal service provider returns, which is not currently the case. 

Tax Refund -Under the new law, tax paid on imports will be applied as a credit under the “Import and Sell” model, while there is currently no such credit. In addition, DAS reimbursement is now available where, after specific compliance, no such restriction is placed under GST. 

Elimination of Existing Exemptions -The current Import Tariff has many exemption notices that can be reviewed and can be withdrawn or converted to a return mechanism. This could mean structural changes to export-related tax exemptions under FTP, where the exemption may be limited to the exemption of BCD payments, while the IGST may not be exempt. . Removing exemptions or replacing them with a reimbursement mechanism could fundamentally change the attractiveness and viability of some of the major FTP programs like EOU, STP, pre-authorization, and more.