Treatment of Imports and Exports

Imports of Goods and Services will be treated as inter-state supplies and IGST will be levied on import of goods and services into the country. The incidence of tax will follow the destination principle and the tax revenue in case of SGST will accrue to the State where the imported goods and services are consumed. Full and complete set-off will be available on the GST paid on import on goods and services.

There is no change in the payment of basic customs duties on imports. No Credit shall be allowed for the basic customs duties paid against the GST Liability. Anti dumping and safeguard duties shall continue to be levied.

Exports will be treated as zero rated supplies. No tax will be payable on exports of goods or services, however credit of input tax credit will be available and same will be available as refund to the exporters.

Implementation of GST may affect present various export promotion schemes, incentives and exemptions in India.

The proposed GST regime mandates that all duties must be paid at the time of the transaction, while refunds can be obtained after exports. For exporters, this could mean a working capital crunch as duties may get held up with tax authorities for months before a refund is processed.

The finance ministry has agreed to refund 90% of the duties paid by exporters in the process of manufacturing items for export within a period of seven days under the Goods and Services Tax (GST) regime. The remaining 10% refund will be made after verifications by tax authorities.

Two schemes are especially likely to be impacted by the GST regime: the Advance Authorization Scheme (AAS) that allows duty-free sourcing of raw material and the Export Promotion Capital Goods (EPCG) scheme that allows duty-free sourcing of machinery for export purposes.

The commerce ministry has sought exemption from inter-state GST on goods transferred from Special Economic Zones (SEZs) across states, arguing that since SEZs are treated as zones outside the country’s territory, they should not pay duties on transactions among them.”

Indian Customs has released a guidance note for importers and exporters. Kindly click here to read the same.

Further the export procedure to be followed has also be published. Kindly click here to read the same.


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