Imports and Exports under Goods Services Tax Act (GST)

As a business owner, it is important to have a clear understanding of the impact of Goods and Services Tax (GST) on your imports and exports. GST has introduced a significant change in the way imports and exports are treated in India, and it is important to be aware of these changes to ensure compliance with the law.

Overview of GST

GST is a comprehensive indirect tax that has been implemented to replace multiple taxes, such as excise duty, service tax, and VAT. GST has been implemented to simplify the tax system, reduce the tax burden on businesses, and increase the efficiency of the tax system. GST is a destination-based tax, which means that the tax is levied at the place of consumption rather than the place of production.

Imports under GST

Under GST, all imports are subject to Integrated Goods and Services Tax (IGST) at the time of import. The IGST is levied on the value of the imported goods, and is paid by the importer at the time of customs clearance. The IGST can be claimed as input credit by the importer, which can be used to set off against the output tax liability under GST. If the imported goods are used for the manufacture of exempted goods or non-taxable goods, the IGST cannot be claimed as input credit.

It is important to note that GST is applicable on imports of both goods and services. For services, the place of supply is determined under the Integrated Goods and Services Tax Act, 2017, and the IGST is levied accordingly.

Exports under GST

Exports are treated as zero-rated supplies under GST. This means that no GST is applicable on exports. However, exporters can claim input tax credit on inputs used in the manufacture or production of goods or services exported. The input tax credit can be claimed as a refund or can be used to set off against the GST liability on other supplies.

It is important to note that for exports, the relevant documents such as shipping bills, bills of lading, and airway bills must be filed with the authorities in order to claim the benefits under the GST law. The relevant documents must contain the GST registration number of the exporter and the buyer, and must be filed within the prescribed time limits.

Conclusion

Imports and exports under GST are subject to significant changes, and it is important for businesses to comply with the law to avoid penalties and other legal consequences. As a business owner, it is important to have a clear understanding of the impact of GST on your imports and exports, and to ensure that your business is compliant with the law.