GST on Imports explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Importing goods into India involves multiple levies: Basic Customs Duty (BCD) under the Customs Act 1962, Integrated GST (IGST) under IGST Act 2017, and Compensation Cess under the GST (Compensation to States) Act 2017. Understanding these levies is essential for computing landed cost of imports and availing ITC.
Import Duty Structure
| Duty | Levied Under | ITC Available? |
|---|---|---|
| Basic Customs Duty (BCD) | Customs Tariff Act 1975 | No (not creditable under GST) |
| Additional Customs Duty (ACD/CVD) | Subsumed into IGST post-2017 | N/A (replaced by IGST) |
| Integrated GST (IGST) | IGST Act 2017 | Yes — creditable as ITC |
| Compensation Cess | GST (Compensation to States) Act | Yes — creditable against Cess liability |
| Social Welfare Surcharge (SWS) | Finance Act 2018 | No |
How IGST on Imports is Computed
IGST on imports is computed on the "Value of Import" which is the Customs Assessable Value (CIF + Landing charges):
Customs Assessable Value = CIF Value + 1% Landing Charges Add: BCD (%) on Assessable Value Add: Social Welfare Surcharge (10% of BCD) = Total Customs Duty Paid Value IGST = IGST Rate × (Assessable Value + BCD + SWS) Compensation Cess (if applicable) = Cess Rate × (Assessable Value + BCD + SWS)
Example Computation
| Item | Amount (Rs.) |
|---|---|
| CIF Value | 1,00,000 |
| Add: 1% Landing Charges | 1,000 |
| = Assessable Value | 1,01,000 |
| Add: BCD @ 10% | 10,100 |
| Add: SWS @ 10% of BCD | 1,010 |
| = IGST Taxable Value | 1,12,110 |
| IGST @ 18% | 20,180 |
| Total Duty Payable (BCD+SWS+IGST) | 31,290 |
ITC on Import IGST
IGST paid on imports is available as Input Tax Credit:
- Import IGST can offset CGST, SGST, or IGST output tax liabilities
- Claimed based on Bill of Entry (BoE) as the document evidencing payment
- BoE must be reflected in GSTR-2B (auto-populated from customs data)
- ITC can be claimed in GSTR-3B in the month the import occurred (or when BoE is available)
- BCD and SWS are NOT creditable — they become part of cost of goods
Import of Services: Reverse Charge Mechanism
Import of services is taxable under IGST at the recipient's hands via Reverse Charge Mechanism (RCM):
- If both supplier (outside India) and recipient (in India) are distinct persons
- Place of supply of services from outside India = location of recipient in India
- Recipient pays IGST under RCM and claims it as ITC (if for business purposes)
- No customs duty on service imports (services are not goods)
Exemptions from Import IGST
- Goods imported under advance authorization for re-export after processing: IGST exempted
- Export Oriented Units (EOUs): IGST exemption on capital goods and inputs
- Special Economic Zones (SEZs): Goods imported into SEZ are zero-rated
- Specific goods under project imports: concessional rate schemes
- Passenger baggage: exemptions up to specified limits
Documentation for Import Transactions
| Document | Purpose |
|---|---|
| Bill of Entry (BoE) | Filed by importer for clearance; basis for ITC claim |
| Bill of Lading/Airway Bill | Shipping document for sea/air freight |
| Commercial Invoice + Packing List | Basis for customs valuation |
| Import License (if applicable) | For restricted goods |
| Certificate of Origin | For FTA/preferential duty claims |
Key Facts About GST on Imports
- Applies in: All states across India, under the relevant central law.
- Mode: Mostly online via the official government portal.
- Typical timeline: Ranges from a few days to a few weeks depending on the case.
- Non-compliance: May attract penalties, interest or late fees.
- Expert help: TaxClue completes the entire process end to end for you.
Can IGST paid on imports be claimed as ITC?
Yes, IGST paid at the time of import is available as Input Tax Credit. It can be offset against CGST, SGST, or IGST output tax liabilities. The Bill of Entry serves as the document for claiming ITC on imports.
What is the assessable value for calculating IGST on imports?
The assessable value (also called Transaction Value) is the CIF (Cost + Insurance + Freight) value plus 1% landing charges. IGST is then computed on the sum of assessable value, Basic Customs Duty, and Social Welfare Surcharge.
Over 90% of compliance penalties in India arise from missed due dates — timely handling can save businesses thousands of rupees each year.
GST on Imports: a key compliance topic in Indian tax and corporate law that businesses and individuals must understand to remain compliant.