GST on Import of Goods — IGST, Basic Customs Duty and ITC on Imports

When goods are imported into India, they are subject to both Customs Duty (levied under the Customs Act) and Integrated GST (IGST, levied under the IGST Act). The IGST on imports replaces the earlier CVD and SAD regime and allows importers to claim ITC of the IGST paid. Here is the complete guide to GST on imports.

Taxes Payable on Import of Goods

• Basic Customs Duty (BCD): Levied on the assessable value (CIF — Cost + Insurance + Freight) at the rate specified in the Customs Tariff Act. NOT part of GST — not recoverable as ITC.
• Social Welfare Surcharge (SWS): 10% of BCD — added on top of BCD. NOT part of GST — not eligible for ITC.
• IGST: Levied on (Assessable Value + BCD + SWS) at the applicable GST rate (5%, 12%, 18% or 28% depending on the product). Fully eligible for ITC.
• GST Compensation Cess: On certain specified goods (luxury goods, tobacco, automobiles) — additional cess over IGST.

IGST Calculation Example

Import of machinery worth USD 10,000 (CIF ₹8,30,000):

• BCD at 10% = ₹83,000
• SWS at 10% of BCD = ₹8,300
• IGST at 18% on (₹8,30,000 + ₹83,000 + ₹8,300) = 18% × ₹9,21,300 = ₹1,65,834
• Total payable: ₹83,000 + ₹8,300 + ₹1,65,834 = ₹2,57,134
• ITC available: ₹1,65,834 (only the IGST component)

ITC on Import IGST

• IGST paid on imports is available as ITC — claimable in GSTR-3B based on the Bill of Entry (customs filing)
• IGST credit appears in GSTR-2B once the Bill of Entry is filed and cleared by Customs
• Blocked credits (Section 17(5)) apply — if the imported goods are for personal use, motor vehicles etc., ITC is not available

Advance Authorisation / EPCG — IGST Exemption for Exporters

• Exporters importing inputs under Advance Authorisation (AA): Exempt from IGST (and BCD) on the imported inputs
• Exporters importing capital goods under EPCG (Export Promotion Capital Goods) scheme: BCD exempt; IGST may or may not apply depending on the scheme version
• Must fulfil export obligation within the prescribed period (typically 6 years)

Conclusion

GST on imports (IGST) is payable at the time of customs clearance and is fully recoverable as ITC — while BCD and SWS are permanent costs. SPOTON provides import GST advisory, ITC reconciliation and customs compliance support for importers across Kerala. Contact us for expert import compliance services.