Impacts of GST on Imports and Exports

By GSTBazaar

28th July 2017


Earlier number of taxes like service tax, excise duty and customs duty was levied on the imports and exports of goods and services. But with the introduction of GST, all the multiple taxes will be unified into one tax. However, customs duty is not covered under the GST regime thus it will continue to be levied on the imports and exports of goods.

 Under the GST regime, integrated goods and service tax is levied on interstate trade and commerce. As per the GST regime Imports of goods and services is considered as the inter-state transaction thus, IGST will be applicable on it.

Impact of GST on import of goods and services

Under the earlier system of indirect taxation, a countervailing duty or CVD at the rate equal to the rate of excise and a special additional duty or SAD at the rate equivalent to VAT was required to be paid on the import of goods. No input tax credit could be availed of the CVD paid except in the case where imported goods are used for further manufacturing of dutiable goods. In addition to this, the taxpayer is not empowered to avail the input tax credit of customs duty paid.

GST has brought some good news for the importers of goods. GST regime has replaced the indirect taxes like CVD and SAD with customs duty and IGST. Further, the taxpayer is entitled to claim a full tax credit as the refund of the IGST paid on the import of goods which was disallowed earlier but customs duty remains to be the cost that the importer is required to bear as he is not entitled to claim any input tax credit on it.

Earlier the recipient of the services from outside the country was liable to pay tax on it at the rate of 15%. Now the recipient is liable to pay IGST at the rate of 18% and avail input tax credit on it.

 Impact of GST on export of goods and services

The taxation provision applicable on exports of goods and services under the GST regime is quite similar to the earlier taxation provisions applicable on exports of goods and services. The exports of services or goods are treated as zero rated supply. Thus no GST is required to be paid by the exporter on exporting goods and services. Also, the exporter of services and goods is empowered to avail credits of the taxes paid on input and input services.   




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Impacts of GST on Imports and Exports