International TradeIGST Act Sec 5

GST on Imports & Customs — IGST, BCD & ITC on Imports

Complete guide to GST on imports: how IGST replaced CVD/SAD, calculation of IGST on Bill of Entry, ITC availability on import IGST, Reverse Charge on service imports, export zero-rating, and customs duty interaction with GST.

Applicable

IGST on Imports

Varies

BCD

Replaced

CVD/SAD

Available

ITC on IGST

Required

Bill of Entry

AV + BCD

IGST Base

RCM

Services Import

Importer

Place of Supply

GST & Customs — How It Works

IGST Replaces CVD & SAD

Under GST, the old Countervailing Duty (CVD) and Special Additional Duty (SAD) on imports have been replaced by IGST. Now importers pay: Basic Customs Duty (BCD) + IGST (calculated on Assessable Value + BCD). This simplifies import taxation and allows full ITC on the IGST component.

IGST Calculation on Imports

IGST on imports = (Assessable Value + BCD + Social Welfare Surcharge) × IGST Rate. Example: Goods worth ₹1,00,000, BCD 10% (₹10,000), SWS 10% of BCD (₹1,000). IGST base = ₹1,11,000. If IGST rate 18% → IGST = ₹19,980. Total duty = ₹10,000 + ₹1,000 + ₹19,980 = ₹30,980.

ITC on IGST Paid at Customs

Full Input Tax Credit is available on IGST paid on imports. The importer claims ITC via GSTR-3B (Table 4A) based on the Bill of Entry. ITC reflects in GSTR-2B after customs data is shared with GSTN. BCD is NOT available as ITC — it remains a cost. Only IGST component is creditable.

Import of Services — RCM

Import of services (from outside India) attracts IGST under Reverse Charge Mechanism. The Indian recipient (importer of service) self-assesses and pays IGST. Place of supply = location of recipient. ITC available on IGST paid under RCM if service is for business use. No Bill of Entry needed for services.

Customs Duty vs GST — Distinction

Customs duty (BCD) is levied under the Customs Act 1962 and is NOT part of GST. IGST on imports is levied under Section 5(1) of IGST Act, 2017, and is collected by Customs authorities on behalf of the GST system. BCD goes to Central Government revenue; IGST is settled between Centre/States per IGST mechanism.

Exports — Zero-Rated Under GST

All exports are zero-rated: no GST on exports. Two options: (1) Export under LUT/Bond without paying IGST, then claim ITC refund, or (2) Pay IGST on exports and claim IGST refund. Most exporters prefer LUT route. Deemed exports (to SEZ, EOU) also zero-rated with ITC refund eligibility.

Import/Export GST Matrix

Transaction	Duty Structure	IGST Rate	ITC
Goods import (general)	BCD + IGST	5%/12%/18%/28%	IGST only
Gold/silver import	BCD 15% + IGST 3%	3%	IGST (3%)
Crude petroleum import	BCD varies + No GST	Outside GST	N/A
Capital goods import	BCD + IGST 18%	18%	Full IGST ITC
IT hardware import	BCD 0-20% + IGST 18%	18%	Full IGST ITC
Services import (consultancy)	No BCD	18% RCM	Full ITC
Services import (software)	No BCD	18% RCM	Full ITC
OIDAR services (B2C)	No BCD	18% (by supplier)	N/A (consumer)
Goods export	Zero	Zero-rated	Refund available
Services export	Zero	Zero-rated	Refund available
SEZ supply (deemed export)	Zero	Zero-rated	Refund available
Re-import (after repair)	BCD exempt + IGST on repair value	18%	On repair value

Frequently Asked Questions

How is IGST calculated on imported goods?

IGST on imports is calculated on: Assessable Value (CIF) + Basic Customs Duty (BCD) + Social Welfare Surcharge (10% of BCD). The IGST rate depends on the HSN classification of the goods (5%, 12%, 18%, or 28%). Full ITC is available on IGST paid. BCD is NOT creditable as ITC.

Can I claim ITC on IGST paid at customs?

Yes, full ITC is available on IGST paid on imports (both goods and services). For goods: claim via Bill of Entry details in GSTR-3B. For services (RCM): self-assess in GSTR-3B and simultaneously claim ITC. BCD (Basic Customs Duty) is NEVER available as ITC — it's a cost to the business.

What replaced CVD and SAD under GST?

GST replaced: (1) CVD (Countervailing Duty) — which was equivalent to excise duty on domestic goods — replaced by IGST, (2) SAD (Special Additional Duty) — which was equivalent to VAT — also replaced by IGST. Now a single IGST replaces both, with full ITC available. This eliminated cascading taxes on imports.

How does import of services work under GST?

When an Indian business imports services (e.g., consulting from US, SaaS from Ireland), IGST is paid under Reverse Charge by the Indian recipient. Place of supply = recipient's location. The recipient self-assesses IGST in GSTR-3B and can simultaneously claim ITC if the service is for business purposes. No Bill of Entry is needed for service imports.

Import/Export GST — Fully Automated

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