New
Published on:
February 20, 2023
By
Paramita

Applicability of GST on imports under Duty Exemption schemes

India's indirect tax system has undergone a significant change with the introduction of the Goods and Services Tax (GST) regime. The GST is a comprehensive tax system that replaced most of the indirect taxes levied by the central and state governments. One of the key features of the GST regime is the levy of tax on goods and services imported into India. However, there are certain duty exemption schemes under which imports are allowed without the payment of customs duty. In this article, we will discuss the applicability of GST on imports under such duty exemption schemes.

Understanding Duty Exemption Schemes

Duty exemption schemes are schemes under which certain goods can be imported into India without the payment of customs duty. These schemes are designed to promote exports, attract foreign investment and enhance the competitiveness of Indian industries. The following are some of the duty exemption schemes available under the GST regime:

1. Advance Authorization Scheme (AAS)

2. Export Promotion Capital Goods Scheme (EPCG)

3. Duty-Free Import Authorization Scheme (DFIA)

4. Special Economic Zone (SEZ) Scheme

Under these schemes, goods can be imported into India without the payment of customs duty, subject to certain conditions. For instance, under the EPCG scheme, an exporter can import capital goods without payment of customs duty, provided that the exporter undertakes to export goods equivalent to six times the value of the imported capital goods over a period of six years. Similarly, under the SEZ scheme, units located within the SEZ can import goods and services without payment of customs duty, subject to certain conditions.

Applicability of GST on Imports under Duty Exemption Schemes

Under the GST regime, import of goods into India is treated as a supply of goods and is therefore subject to GST. However, under the duty exemption schemes, goods can be imported without payment of customs duty. The question that arises is whether GST is applicable on such imports. The answer is yes, GST is applicable on such imports.

The GST law provides that any supply of goods or services, which is not a supply of goods or services in the course of inter-state trade or commerce, shall be treated as a supply of goods or services in the course of intra-state trade or commerce. This means that even if the goods are imported without payment of customs duty, the import of such goods will be treated as a supply of goods in the course of intra-state trade or commerce, and therefore, will be subject to GST.

However, under the GST regime, the customs duty paid on imports is allowed as input tax credit (ITC) against the payment of GST. This means that if a person imports goods without payment of customs duty under a duty exemption scheme, he will not be able to claim ITC on the customs duty paid. This could lead to an increase in the cost of imported goods.

Conclusion

In conclusion, under the GST regime, imports under duty exemption schemes are subject to GST. However, the customs duty paid on such imports is allowed as input tax credit against the payment of GST. It is important for businesses to understand the applicability of GST on imports under duty exemption schemes to avoid any non-compliance issues. Businesses should also factor in the cost of customs duty while importing goods under a duty exemption scheme.

Suggestions



Ornamental Fish- GST Rates HSN Code 3011
RAW SKINS OF SHEEP LAMBS - GST RATES & HSN CODE 4102
CBIC On Different Types of Declared Services under GST

Updated on:
March 16, 2024