🏗️ HSN Chapter 98: Project Imports, Laboratory Chemicals, Passenger Baggage & Ship Stores - GST Rates 2026

Answer: Machinery and equipment imported for mega infrastructure projects (power plants, refineries, industrial plants, irrigation, mining) attract standard 18% GST. This rate has remained unchanged and applies uniformly to all project imports classified under HSN 9801.

Project Import Categories (All 18% GST):

Project Type	Equipment Examples	GST Rate
Power Projects	Turbines, generators, boilers, transformers	18%
Industrial Plants	Refinery units, steel plant machinery, chemical equipment	18%
Irrigation Projects	Dam equipment, canal machinery, water systems	18%
Mining Projects	Excavators, drilling rigs, ore processing equipment	18%
Oil/Gas Exploration	Drilling platforms, pipelines, refinery machinery	18%

Eligibility Criteria for Project Imports:

• ✅ Mega project with minimum investment (typically Rs 100+ crore)
• ✅ Project approved by competent authority (Ministry/State Government)
• ✅ Machinery/equipment essential for project and not available domestically
• ✅ For own use in the project, not for trading
• ✅ Essentiality certificate from project authorities

Price Impact (18% GST):

• 🏗️ Power Plant Turbine (Rs 50 crore): Rs 50 Cr + Rs 9 Cr GST = Rs 59 Cr total
• 🏗️ Refinery Equipment (Rs 100 crore): Rs 100 Cr + Rs 18 Cr GST = Rs 118 Cr total
• 🏗️ Mining Machinery (Rs 10 crore): Rs 10 Cr + Rs 1.8 Cr GST = Rs 11.8 Cr total

ITC Benefit:

• ✅ Full ITC available if project entity is GST registered
• ✅ Reduces effective GST cost through input credit mechanism
• ✅ Can be claimed against output GST liability

Answer: Budget 2026 (announced February 1, 2026) introduced a HISTORIC healthcare relief - 17 life-saving cancer-related drugs and 7 medicines for rare diseases are now FULLY EXEMPT (0% duty) from customs duty and GST. This is a MASSIVE relief for patients suffering from cancer and rare diseases who previously had to pay 5-10% taxes on expensive imported medicines.

Budget 2026 Healthcare Relief (Effective Feb 1, 2026):

Category	Coverage	Old Rate	New Rate
17 Cancer Drugs	Trastuzumab, Rituximab, Pembrolizumab, Nivolumab, etc.	5-10% + Duty	0% EXEMPT
7 Rare Disease Medicines	Thalassemia, Hemophilia, Duchenne Muscular Dystrophy, etc.	5-10% + Duty	0% EXEMPT

Examples of Exempt Cancer Drugs (0% Duty):

• 💊 Trastuzumab (Herceptin) - Breast cancer treatment
• 💊 Rituximab (MabThera) - Lymphoma treatment
• 💊 Pembrolizumab (Keytruda) - Advanced cancer immunotherapy
• 💊 Nivolumab (Opdivo) - Melanoma and lung cancer
• 💊 Bevacizumab (Avastin) - Colorectal and lung cancer
• 💊 Cetuximab (Erbitux) - Colorectal cancer

Rare Disease Medicines (0% Duty):

• 💊 Thalassemia treatment drugs
• 💊 Hemophilia clotting factor medicines
• 💊 Duchenne Muscular Dystrophy therapies
• 💊 Other ultra-rare genetic disorder treatments

Price Impact (Budget 2026 Relief):

• 💊 Cancer Drug (Rs 1,00,000): Old: Rs 1,05,000 (5%) → New: Rs 1,00,000 (0%) = SAVED Rs 5,000!
• 💊 Cancer Drug (Rs 5,00,000): Old: Rs 5,25,000 (5%) → New: Rs 5,00,000 (0%) = SAVED Rs 25,000!
• 💊 Rare Disease Med (Rs 10,00,000): Old: Rs 10,50,000 (5%) → New: Rs 10,00,000 (0%) = SAVED Rs 50,000!

Who Benefits?

• 🏥 Cancer patients requiring expensive immunotherapy and targeted therapy
• 🏥 Rare disease patients with limited treatment options
• 🏥 Families bearing high medical costs for chronic conditions
• 🏥 Patients importing drugs not available or affordable in India

Documentation Required:

• 📋 Valid prescription from registered oncologist/specialist
• 📋 Medical necessity certificate
• 📋 Patient medical records and diagnosis proof
• 📋 Import declaration for personal use (not for resale)

Answer: Indian residents and foreign tourists arriving from abroad can bring personal effects and goods duty-free up to specified value limits. For Indian residents above 10 years, the limit is Rs 50,000. Goods exceeding this limit attract customs duty and GST.

Duty-Free Baggage Allowances (February 2026):

Traveler Category	Duty-Free Limit	Age Criteria	Conditions
Indian Residents (Adults)	Rs 50,000	Above 10 years	Stay abroad 3+ days
Indian Residents (Children)	Rs 15,000	Up to 10 years	Accompanied by adult
Foreign Tourists	Rs 15,000	All ages	Tourist visa holders
Crew Members	Rs 1,500	All ages	Per trip basis

What's Included in Duty-Free Baggage?

• ✅ Personal Effects: Used clothing, footwear, toiletries, cosmetics
• ✅ Electronics (Used): 1 laptop, 1 camera, 1 mobile phone (if used)
• ✅ Jewelry: Within prescribed limits (gold up to 1 kg for certain categories)
• ✅ Gifts & Souvenirs: Within the overall Rs 50,000 value limit
• ✅ Alcohol: 2 liters for adults (state regulations apply at destination)
• ✅ Cigarettes: 100 cigarettes OR 25 cigars OR 125 grams tobacco

Goods Exceeding Limits:

• ⚠️ Value above Rs 50,000 attracts customs duty + GST on excess value
• ⚠️ Must declare at Red Channel at airport customs
• ⚠️ Flat rate duty or assessed rate applies (typically 35-40% on electronics)
• ⚠️ Undeclared goods may be confiscated and penalties imposed

Special Allowances:

• ✈️ Transfer Passengers: No free allowance (in transit only)
• ✈️ Short Stay (under 3 days): Reduced allowance of Rs 15,000
• ✈️ Returning NRIs: Enhanced allowances under specific schemes

Examples:

• 🧳 Indian resident brings Rs 40,000 worth goods = Fully duty-free (within Rs 50K limit)
• 🧳 Indian resident brings Rs 70,000 worth goods = Duty on Rs 20,000 excess value
• 🧳 New iPhone (Rs 80,000) declared = Duty payable on Rs 30,000 (above Rs 50K limit)

Answer: Laboratory chemicals imported for research, testing, and analytical purposes attract 18% GST under HSN 9802. However, since September 2024, rules have been STRICTLY enforced - this classification applies ONLY when chemicals are for "own use" in laboratories, NOT for trading or commercial resale.

Eligibility for 18% Rate (Own Use Only):

Criteria	Eligible (18% GST)	Not Eligible (Regular HSN Rate)
Purpose	Research, testing, quality control, analysis	Trading, manufacturing, commercial resale
Importer Type	Recognized labs, R&D institutions, universities	Chemical traders, distributors, wholesalers
Quantity	Small quantities consistent with lab use	Bulk commercial imports
Documentation	End-use certificate from lab director	No proper documentation or trading intent

Who Can Import Under HSN 9802 (18% GST)?

• 🔬 Government research institutions (CSIR, DRDO, ICMR, ICAR labs)
• 🔬 University laboratories and academic R&D centers
• 🔬 Corporate R&D centers (own use for product development/testing)
• 🔬 Quality control/testing labs (pharmaceutical, food, environmental)
• 🔬 Forensic science laboratories
• 🔬 Hospital pathology labs (diagnostic chemicals)

NOT Eligible for 18% (Will attract regular rates):

• ❌ Chemical traders importing for resale to other parties
• ❌ Distributors importing for commercial distribution
• ❌ Manufacturers importing bulk chemicals for production
• ❌ Misuse of lab chemical classification for avoiding higher GST

September 2024 Rule Tightening:

• ⚠️ Customs authorities now strictly verify end-use certificates
• ⚠️ Surprise inspections at importers' premises to confirm lab use
• ⚠️ Penalties for misclassification or diversion to trading
• ⚠️ Importers must maintain detailed usage records

Documentation Required:

• 📋 Import license from DGFT (if chemical is restricted/hazardous)
• 📋 End-use certificate from laboratory director/head of institution
• 📋 Institutional registration and recognition documents
• 📋 Declaration that chemicals are for own laboratory use only
• 📋 Research project details or testing requirements

Price Examples (18% GST):

• 🧪 Lab Reagents (Rs 50,000): Rs 50,000 + Rs 9,000 GST = Rs 59,000 total
• 🧪 Analytical Standards (Rs 1,00,000): Rs 1,00,000 + Rs 18,000 GST = Rs 1,18,000 total

Answer: Budget 2026 (announced February 1, 2026) HALVED the Basic Customs Duty (BCD) on personal use goods imported by post or courier from 20% to 10%. This provides significant relief for individuals receiving gifts, personal items, and non-medicine goods from abroad.

Budget 2026 Personal Imports Relief:

Category	Old BCD Rate	New BCD Rate (Budget 2026)	Savings
Personal Use Goods (General)	20%	10%	50% reduction in duty!
Life-Saving Drugs	5-10% + Duty	0% EXEMPT	100% duty exemption!
Other Medicines	5% GST	5% GST	No change
Books & Periodicals	0%	0%	Already exempt

What's Covered Under Personal Imports (10% BCD)?

• 📦 Gifts received from abroad by post/courier
• 📦 Personal items ordered online from international sellers
• 📦 Clothing, accessories, gadgets for personal use
• 📦 Cosmetics, personal care products
• 📦 Hobby items, collectibles, personal goods

Price Impact Examples (20% → 10% BCD):

• 📦 Gift worth Rs 5,000 (BCD base): Old: Rs 6,000 (20%) → New: Rs 5,500 (10%) = SAVED Rs 500!
• 📦 Gift worth Rs 10,000: Old: Rs 12,000 (20%) → New: Rs 11,000 (10%) = SAVED Rs 1,000!
• 📦 Gift worth Rs 20,000: Old: Rs 24,000 (20%) → New: Rs 22,000 (10%) = SAVED Rs 2,000!

Threshold Limits:

• ✅ Gifts up to Rs 5,000 value are duty-free (no BCD, no GST)
• ✅ Above Rs 5,000 - 10% BCD + applicable GST on (assessable value + BCD)
• ✅ Books and periodicals - always 0% duty and 0% GST

Important Notes:

• ⚠️ BCD is calculated on CIF value (Cost + Insurance + Freight)
• ⚠️ After adding BCD, GST is calculated on (CIF + BCD) value
• ⚠️ Courier/postal charges may apply separately
• ⚠️ Some restricted items require import license

Complete Calculation Example:

• 📦 Gift CIF value: Rs 10,000
• 📦 BCD @ 10%: Rs 1,000
• 📦 Assessable value: Rs 11,000
• 📦 GST @ 18%: Rs 1,980
• 📦 Total duty + GST: Rs 2,980
• 📦 Final cost to receiver: Rs 12,980

Answer: Yes, project importers can claim FULL ITC (Input Tax Credit) on the 18% GST paid on imported machinery if the project entity is registered under GST and the machinery is used for making taxable supplies. ITC effectively reduces the net GST burden through the input credit mechanism.

ITC Eligibility for Project Imports:

Condition	Requirement	ITC Status
GST Registration	Project entity must be GST registered	✅ ITC Available
Use in Business	Machinery used for making taxable supplies	✅ ITC Available
Capital Goods	Machinery qualifies as capital goods	✅ Full ITC in stages
Exempt Supplies	Used for exempt or non-taxable supplies	❌ ITC Blocked
Personal Use	Not used for business purposes	❌ ITC Blocked

ITC Mechanism for Project Imports:

• ✅ GST paid at import (IGST) can be claimed as ITC
• ✅ Claim in GSTR-3B return of the month of import or later
• ✅ For capital goods, ITC can be claimed in installments or full
• ✅ Set off against output GST liability (CGST, SGST, IGST)
• ✅ Refund available if ITC exceeds output liability (inverted duty structure)

ITC Example (Power Plant Project):

• 🏗️ Turbine imported: Rs 50 crore + Rs 9 crore IGST (18%) = Rs 59 crore paid
• 🏗️ ITC of Rs 9 crore claimed in GSTR-3B
• 🏗️ Power plant generates electricity (taxable supply at 5% GST)
• 🏗️ Monthly output GST collected: Rs 50 lakh
• 🏗️ ITC of Rs 9 crore can be used to offset output GST over 18 months
• 🏗️ Effective GST burden: ZERO (fully recovered through ITC)

Documentation for ITC Claim:

• 📋 Bill of Entry with IGST payment proof
• 📋 Import invoice and shipping documents
• 📋 GST registration certificate of importer
• 📋 Books of accounts showing receipt and use of machinery
• 📋 GSTR-2A/2B showing inward supplies

Special Considerations:

• ⚠️ SEZ units can import without paying IGST (zero-rated supply)
• ⚠️ EOU (Export Oriented Units) can claim refund of IGST paid
• ⚠️ If project output is GST exempt (e.g., certain healthcare services), ITC not available
• ⚠️ Proper records must be maintained for GST audit purposes