Goods and Services worth 400 crore are imported by our country every year. According to the international trade center India is the 6th largest Importer. So staying tax compliant in this large market is a greater task now more than ever before. So In this blog post we will delve deep into applicability and calculation of GST on Imported Goods. So, whether you're a business owner involved in international trade or curious individual. This article is worth your time.
Under the GST Act, importing goods is considered as bringing goods into India from abroad. This is treated as an inter-state supply and is subject to the Integrated Goods and Services Tax (IGST). Along with IGST, customs duties are also applicable to imported goods. The Customs Tariff Act, 1975 has been updated in preparation for the implementation of GST. To include this imposition of integrated tax and compensation cess on imported goods.
The amount of GST you have to pay depends on how much the goods are worth. As well as any other taxes or charges that apply like assessable value, customs duty, and any other relevant duties . The assessable value is the value of the goods, and based on that, the GST is calculated. If the goods you're bringing in are luxury or demerit goods, which are special types of goods. You may have to pay an extra tax called GST Compensation Cess. This is because these goods are considered more expensive or harmful. The calculation of GST on imports involves the HSN code for classification purposes.
To understand the calculation of GST on imported goods, let's consider an example:
1. Assessable Value: Rs. 100
2. Basic Customs Duty (BCD): 10% ad-valorem (Rs. 10)
3. Integrated Tax Rate: 18%
4. Value for the purpose of levying IGST: Rs. 110
GST-Integrated Tax = 18% of Rs. 110/- = Rs. 19.80 Total Taxes = Rs. 29.80
In the case of goods subject to GST Compensation Cess, the cess will be levied on the value of Rs. 110, excluding the IGST amount.
According to the Customs Act, 1962, when goods are brought into a customs station, they can only be taken out after paying Customs Duty and Integrated GST tax. So, when importers want to move their goods from the customs station to a warehouse, they need to pay the Integrated tax. This ensures that all the necessary taxes are paid before the goods can be taken out.
Under the GST system, importers can benefit from input tax credits. To reduce the impact of multiple taxes and ensure that the consumer doesn't bear the burden of GST. Importers can claim input tax credit for the IGST they paid during the import process. This credit can be used to offset their IGST liability on supplies they make. Also, it's important to remember that ITC is not available for the Basic Customs Duty paid by the importer.
It's important for businesses owners engaged in international trade to understand the GST Applicability. This knowledge helps ensure compliance with regulations and allows for effective management of tax responsibilities. By considering the various taxes, calculation methods, and import procedures under GST, importers can navigate the system and fulfill their tax obligations properly.
The Opportunity of Personal Hearing Under The GST Law
