How are Import and Export Treated in GST

By Registrationwala

6th May 2017

 

What is GST? Let’s know what GST is.  The full form of GST is Goods and Services Tax. The goods and services tax (GST) is a value-added tax levied on most goods and services sold for domestic consumption. The tax is levied to provide revenue for the federal government. The GST is paid by consumers, but it is levied and remitted to the government by businesses selling the goods and services. In the GST regime, Excise, Service Tax and VAT will be subsumed into GST and customs duty will continue to be levied separately.

Import of Goods Under Current Regimes

In the present administration, a man who imports products needs to pay countervailing obligation (CVD), customs duty and special addition duty (SAD).

CVD is collected at a rate proportional to the rate of Excise on such goods, in the event that they had been made in India. SAD is proportional to VAT on the goods in India. CVD and SAD are imposed to bring the imported item's cost to its actual market cost in India.

 In the event that the importer utilizes the imported goods to manufacture dutiable goods or provide or give taxable services, CVD paid on inputs is available as tax credit. In the event that the shipper is only a merchant, CVD on imports is not accessible as credit. SAD paid on import is qualified for discount, subject to conditions. In any case, no credit is given on customs duty paid and it turns into a cost for the imported.

How Import Duties are Charged in case of Imports of Goods in the current scenario:-

Let us assume UR Nutrition in Delhi purchases Supplement from a supplier Optimum Nutrition in Sydney Australia. In this case the taxes will be calculated as follows:-

Specifications

Quantity

Cost per item (Rs)

Amount

Whey Protein

200

2500 (51.58 AUD)

5,00,000

Creatine

100

5000 (103.37 AED)

5,00,000

Total

300

 

1,00,0000

Custom Duty@10%

 

 

1,00,000

Custom Education cess 3% on Custom Duty

 

 

3,000

Sub Total

 

 

11,03,000

CVD@12.5%

 

 

13,7875

Sub Total

 

 

12,40,875

SAD@4%

 

 

49,635

Total Cost of Import

 

 

12,90,510

Import of Services Under Current Regimes

Any Individual Importing services needs to pay Service Tax on the Imported Service according to the Service Tax Rate applicable in India. The tax credit of the service tax can be claimed by the Imported paid on the Imports.

Let us assume Sharma Car Care in Delhi avails Car Designing Services from  Mary Car Services in Bangladesh of Rs.50,00,000.In this case the taxes will be calculated as follows:-

Specifications

Amount (Rs.)

Car Designing Services

50,00,000

Service Tax @14%

7,00,000

Krishi Kalyan Cess @0.5%

25,000

Swachh Bharat Cess @0.5%

25,000

Total Cost of Import

57,50,000

Export of Goods Under Current Regimes

In the Current Scenario, Exports of Goods and Service are Zero Rated which means rate of tax on exports is 0%. Refund of the tax paid on inputs used to manufacture/purchase/provide the exported goods or services can also be claimed by the exporter.

Import of Goods Under GST Regimes

An Individual who Imports goods needs to pay customs duty and IGST under the GST regime. The distinction here is that CVD and Dismal charged on imports in the current regime will be replaced by IGST under GST. IGST will be collected at the rate applicable to the Imported Goods in India. An importer can claim full expense credit of IGST paid on imports. Consequently, importer who was not able claim credit of CVD or Tragic in the present administration can now guarantee full expense credit of the IGST paid on imports. Be that as it may, no expense credit will be given on traditions customs duty paid and it remains a cost for the shipper under GST too.

How Import Duties are Charged in case of Imports of Goods in the current scenario

Let us assume UR Nutrition in Delhi purchases Supplement from a supplier Optimum Nutrition in Sydney Australia. In this case the taxes will be calculated as follows:

Specifications

Quantity

Cost per item (Rs)

Amount

Whey Protein

200

2500 (51.58 AUD)

5,00,000

Creatine

100

5000 (103.37 AED)

5,00,000

Total

300

 

1,00,0000

Custom Duty@10%

 

 

1,00,000

Education cess 3% on Custom Duty

 

 

3,000

Sub Total

 

 

11,03,000

IGST @18%

 

 

1,98,540

Total Cost of Import

 

 

13,01,540

Import of Services Under GST REGIMES

A Supply will be considered as Import on Service under GST in the following cases:-

  • If the Supplier of the service is located outside India
  • If the recipient of the service is located in India
  • If the place of supply of the service is in India

Let us assume Sharma Car Care in Delhi avails Car Designing Services from  Mary Car Services in Bangladesh of Rs.50,00,000.In this case the taxes will be calculated as follows:-

Specifications

Amount (Rs.)

Car Designing Services

50,00,000

IGST @18%

9,00,000

Total Cost of Import

59,00,000

Export of Goods Under  GST Regime

Under GST the exports will be similar to the current regime that will be zero rated. An exporter can likewise claim tax refund under GST on the tax paid on input used to manufacture/buy/give the exported goods or services.

Export of Services Under  GST Regime

Following are the particular conditions have been set down for a supply to be viewed as an export of service under GST:-

  • Supplier of the Service is located in India
  • Recipient of the Service is located outside India
  • Place of supply of the service is outside India
  • Payment for the service has been received by the supplier in convertible foreign exchange
  • Supplier and Recipient are not establishment of the same individual

Let us assume Sharma Consultancy in Delhi provides business consultancy services to Mary Techpower in Hongkong.So the payment will be received in Hongkong currency. Here the supplier location is Delhi and the location of the recipient is HongKong. The place of supply will be the location of the recipient that will be HongKong and the payment received will be in Singapore Dollars. Since the supplier and the recipient are different individuals, hence this supply qualifies as export of service and the rate of tax on the supply will be 0%.

Conclusion

The levy of charges and treatment of taxes if there should be an occurrence of imports and exports largely remains the same under Goods and Service Tax in comparison to the current existing laws.. If there should be an occurrence of a merchant, full info credit will be accessible on the IGST paid on imports and extra information credit will be accessible on the GST paid on a wide range of sources of info utilized or planned to be utilized as a part of the course of or for the facilitation of business. Correspondingly, on account of an exporter, discount will be given on the assessment paid on all sources of info utilized as a part of the course of business. By and large, expenses of import and fare are required to diminish under GST and consistence is relied upon to end up plainly less demanding with the joining of different assessment laws into one law.

 

How are Import and Export Treated in GST

2017-05-06