GST on Imports: Everything You Need to Know

For any business importing goods into India, understanding the tax structure is fundamental to profitability. The introduction of the Goods and Services Tax (GST) streamlined the process, but it also introduced new concepts that every importer must master. The most important of these is the Integrated GST, or IGST.

Getting this wrong can lead to incorrect cost calculations, compliance issues, and a direct hit to your bottom line. At Befach.com, we are experts in navigating the complexities of import taxation. This guide will break down everything you need to know about GST on imports.

What is IGST and Why is it Charged on Imports?

Under the GST regime, the import of goods into India is treated as an "inter-state supply." This means that instead of CGST and SGST, a single tax, the Integrated Goods and Services Tax (IGST), is levied on all imported goods. This is in addition to the Basic Customs Duty (BCD).

How is IGST on Imports Calculated?

This is the most critical part to understand. IGST is not calculated on the factory price of your goods. It is calculated on the value of the goods *after* the Basic Customs Duty has been added.

The formula is simple:

IGST = (Assessable Value of Goods + Basic Customs Duty) x GST Rate of the Product

• Assessable Value: This is the value of your goods as determined by customs, which is typically the CIF value (Cost, Insurance, and Freight).
• Basic Customs Duty (BCD): This is the standard duty levied on the Assessable Value. The rate varies depending on the product's HS Code. You can research these rates on the CBIC portal.

The Best Part: Claiming Input Tax Credit (ITC)

Here's the good news: The IGST you pay on your imports is not a sunk cost. If you are a registered business with a GSTIN, you can claim the full amount of IGST paid as an Input Tax Credit (ITC).

This ITC can then be used to offset the GST you collect on your domestic sales. This is a crucial mechanism that prevents the cascading effect of taxes and is a major benefit of being fully compliant.

Essential Steps for GST Compliance on Imports

1. Get a GSTIN: You must be registered under GST to import goods. You can register on the official GST Portal.
2. Pay IGST During Clearance: The calculated IGST must be paid at the time your goods are cleared from customs.
3. File Your GST Returns: You must file your monthly GST returns (like GSTR-3B) to declare the IGST paid and claim it as ITC.

The Befach Advantage: Your Partner in Tax Compliance

This process requires precision. A mistake in valuation or documentation can lead to incorrect tax payments and issues with claiming your ITC.

• Our sourcing team ensures the Commercial Invoice from your supplier is accurate, forming the basis of a correct valuation.
• Our customs clearance experts are masters of tax calculation. We ensure the correct BCD and IGST are paid, and that you have the perfect documentation (the Bill of Entry) to claim your ITC without any issues.
• We manage the entire process, from sourcing to logistics, ensuring full compliance with the foreign trade policies set by the DGFT.

Import Smart, Import Compliant

Understanding GST is key to protecting your profits and running a healthy import business. With an expert partner, you can navigate this landscape with confidence.

Ready to ensure your imports are fully tax-compliant and cost-effective? Contact the Befach team today.