How to Understand GST on Import of Goods and Services in India: A Comprehensive Guide

India implemented the Goods and Services Tax (GST) on July 1, 2017, which is a comprehensive indirect tax levied on the supply of goods and services in the country. The GST law in India replaced multiple indirect taxes such as value-added tax (VAT), excise duty, and service tax. It is a destination-based tax system that aims to simplify the indirect tax regime and promote ease of doing business. Analysing GST case laws can provide valuable insights into the interpretation and application of the Goods and Services Tax in India.

Importance of Import of Goods and Services under GST: 

Import of goods and services is an important aspect of international trade and commerce. Under the GST law regime, the import of goods and services is treated as a supply, and the tax liability is calculated based on the value of the imported goods or services. The GST on imports plays a crucial role in determining the competitiveness of domestic industries, protecting the domestic market, and boosting the country's revenue.

GST on Import of Goods: 

Under the GST law regime, the import of goods is treated as a supply of goods and is liable to Integrated Goods and Services Tax (IGST) in addition to the Basic Customs Duty (BCD) levied by the Customs Department. The IGST is a combination of Central GST (CGST) and State GST (SGST), and it is levied at the rate applicable to similar goods sold within the country.

GST on Import of Services: 

The import of services under the GST law regime is treated as a supply of services and is liable to IGST. The tax liability is calculated based on the value of the imported services as determined by the Customs Department. The place of supply of services is determined based on the location of the recipient of services.

Input Tax Credit (ITC) on Import of Goods and Services: 

Registered taxpayers can claim Input Tax Credit (ITC) on the IGST paid on the import of goods and services. However, the ITC is available only if the imported goods or services are used for business purposes. The ITC can be claimed in the same manner as ITC on domestic supplies.

GST on Imports - Compliance Requirements: 

Importers are required to comply with various compliance requirements under the GST law regime. They need to obtain a GST registration and an Import Export Code (IEC) from the Customs Department. They are also required to file GST returns and pay the applicable IGST and BCD on the import of goods and services.

Conclusion: 

In conclusion, the implementation of GST in India has simplified the indirect tax regime for businesses and boosted the country's revenue. However, individuals also need to be mindful of their personal finance and expenses. On Fi Money, you can open a Federal Bank Savings Account, get a personal finance assistant-Ask Fi. It's a money management tool to help users achieve their financial goals and develop better monetary habits. With Fi Money, you can easily track your shopping and automatically categorise your spending, making personal finance management a breeze. Just like GST has simplified finances for businesses, Fi Money simplifies finance for individuals. Start tracking your personal expenses with Fi Money today to achieve financial stability and freedom.

Frequently asked questions 

What is the section for the import of services under GST? 

According to Article 269A under the GST law regime, the import of goods or services into India will be considered inter-state trade or commerce, and, therefore, subject to the levy of integrated tax on the supply of goods, services or both.

What is the import of goods and import of services? 

The import of goods has been defined in the IGST Act, 2017 as bringing goods into India from a place outside India. All imports shall be deemed as inter-State supplies and, accordingly

The integrated tax shall be levied in addition to the applicable Customs duties.

Import of services has specifically been defined under IGST Act, 2017 and refers to the 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 As per the provisions contained in Section 7(1)(b) of the CGST Act, 2017, import of services under consideration of whether or not in the course or furtherance of business, shall be considered as a supply.