GST on Import of Goods – Complete Guide to IGST, Customs Duty & Compliance

What is Import of Goods Under GST?

Import of goods under GST means bringing goods into India from a place outside India. As per Section 2(10) of the IGST Act, "import of goods" with its grammatical variations means bringing goods into India from a place outside India. All imports are treated as inter‑state supplies under GST. Therefore, IGST is levied on imports. Additionally, customs duties (Basic Customs Duty, Social Welfare Surcharge, etc.) are levied under the Customs Act, 1962. The importer must pay both IGST and customs duties to clear the goods. DisyTax assists importers with GST registration, ITC claims, and compliance. Start with our GST basic terms to build a foundation.

Is GST Applicable on Import of Goods?

Yes, IGST is applicable on import of goods. Under Section 5(1) of the IGST Act, IGST is levied on all inter‑state supplies of goods. Since imports are deemed as inter‑state supplies, IGST is charged at the time of import. The IGST rate is the same as the rate applicable on similar goods sold domestically (e.g., 5%, 12%, 18%, or 28%). In addition to IGST, the importer must pay Basic Customs Duty (BCD) and Social Welfare Surcharge (SWS) as per the Customs Tariff Act. These are not part of GST but are separate levies. Thus, the total cost of import includes the CIF value (cost, insurance, freight) + BCD + SWS + IGST.

IGST on Import of Goods

IGST on import of goods is the Integrated Goods and Services Tax levied at the time of customs clearance. It is calculated on the assessable value of goods plus the basic customs duty and social welfare surcharge. The applicable IGST rate depends on the HSN classification of the goods – 5%, 12%, 18%, or 28%. For example, importing electronics attracts 18% IGST, while importing luxury cars attracts 28% IGST. The IGST paid is available as input tax credit to registered importers. The legal basis is Section 5 of the IGST Act read with the Customs Tariff Act.

Difference Between Customs Duty and IGST

Customs duty and IGST are two distinct levies on imports:

• Basic Customs Duty (BCD): Levied under the Customs Act, 1962. Rate varies based on the product and country of origin. BCD is not creditable under GST (it is a cost).
• IGST: Levied under the IGST Act, 2017. Rate is the same as the GST rate for that product. IGST is creditable as input tax credit for registered importers.
• Social Welfare Surcharge (SWS): Levied at 10% of BCD (or 3% in some cases). It is also a cost and not creditable.

Example: Importing a machine with CIF value ₹10,00,000, BCD 7.5% = ₹75,000, SWS 10% of BCD = ₹7,500, IGST 18% on (₹10,00,000 + ₹75,000 + ₹7,500) = ₹1,94,850. Total customs duty and IGST payable = ₹75,000 + ₹7,500 + ₹1,94,850 = ₹2,77,350. The IGST of ₹1,94,850 can be claimed as ITC.

How GST is Calculated on Imported Goods

IGST on imported goods is calculated on the aggregate of:

• Assessable Value (CIF): Cost of goods + insurance + freight to India.
• Basic Customs Duty (BCD): As per the applicable rate in the Customs Tariff Act.
• Social Welfare Surcharge (SWS): 10% of BCD (in most cases).

The formula is: IGST = (Assessable Value + BCD + SWS) × IGST Rate.

Example: You import electronic components with CIF ₹2,00,000. BCD @ 10% = ₹20,000. SWS @ 10% of BCD = ₹2,000. Total value for IGST = ₹2,22,000. IGST @ 18% = ₹39,960. Total import duty and tax = ₹20,000 + ₹2,000 + ₹39,960 = ₹61,960. The ₹39,960 IGST is available as ITC.

Valuation Rules for Import of Goods

The assessable value for calculating IGST and customs duties is determined under Section 14 of the Customs Act, 1962 and the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. The value is generally the transaction value (the price actually paid or payable for the goods), adjusted for certain elements like:

• Commissions and brokerage
• Royalties and license fees
• Packing costs
• Transportation and insurance up to the port of import (CIF)

If the transaction value is not acceptable, customs uses alternate methods like the value of identical goods, similar goods, deductive value, or computed value. Proper valuation is critical because under‑valuation attracts penalties and confiscation of goods. DisyTax advises importers on correct valuation to avoid disputes.

Basic Customs Duty (BCD) and GST

BCD is the primary customs duty levied on imported goods. It is not part of GST; it is a separate levy under the Customs Act. BCD rates vary widely – from nil (for essential goods) to as high as 100% for certain luxury or protected items. BCD is calculated on the assessable value (CIF). Importantly, BCD is not creditable against GST liability. It is a sunk cost for the importer. However, BCD is added to the value for calculating IGST. So, IGST is charged on the landed cost including BCD.

Social Welfare Surcharge on Imports

Social Welfare Surcharge (SWS) is levied under the Finance Act at the rate of 10% of the aggregate of Basic Customs Duty. For certain goods, the rate may be 3%. SWS is also not creditable under GST. It is a cost to the importer. Like BCD, SWS is added to the value for IGST calculation. So, IGST is effectively charged on the all‑inclusive landed cost (CIF + BCD + SWS).

Import of Goods Through Courier and E‑Commerce Platforms

When goods are imported via courier (e.g., DHL, FedEx) or through e‑commerce platforms like Amazon Global, Alibaba, etc., IGST and customs duties still apply. For shipments valued up to ₹5,000 (as per current limits for courier imports), a simplified clearance process may apply. However, for higher values, a regular bill of entry is required. The IGST and customs duties are calculated by the courier or customs broker, and the importer must pay them to clear the parcel. ITC can be claimed only if the importer is registered and the bill of entry contains the GSTIN. For personal imports, ITC is not available. For more on e‑commerce imports, see our GST for Amazon sellers guide.

GST on Imported Machinery and Equipment

Importing capital goods (machinery, plant, equipment) for business use attracts IGST at the applicable rate (usually 18% or 28%). The importer can claim full ITC on this IGST in the month of import, subject to conditions under Section 16 of the CGST Act. Since capital goods are high‑value, the ITC can significantly reduce the effective cost. The bill of entry must clearly mention the importer's GSTIN for ITC to be reflected in GSTR‑2A. For example, a manufacturer importing a CNC machine worth ₹50 lakhs with 18% IGST of ₹9 lakhs can claim the entire ₹9 lakhs as ITC.

GST on Imported Raw Materials

Importing raw materials for manufacturing or processing attracts IGST. The importer can claim ITC on the IGST paid, which can be used to offset the output GST liability when the finished goods are sold domestically. This ensures that the GST chain is seamless – the tax paid at import is not a cost. For example, a textile manufacturer importing cotton yarn with 5% IGST can claim ITC and use it to pay the GST on the final fabric.

GST Registration Requirements for Importers

Any person who imports goods into India must obtain GST registration, irrespective of turnover. This is because import is an inter‑state supply, and Section 24 of the CGST Act mandates registration for persons making inter‑state supplies. Additionally, to claim ITC on IGST paid at import, the importer must have a valid GSTIN. The registration process is online via the GST portal. Documents required: PAN, Aadhaar, business address proof, bank account proof, and IEC (Import Export Code) which is mandatory for imports. Our GST registration threshold limit guide explains all details.

Input Tax Credit (ITC) on Imported Goods

Yes, ITC can be claimed on IGST paid on imported goods. As per Section 16 of the CGST Act, every registered person is entitled to take credit of input tax charged on any supply of goods or services used in the course or furtherance of business. This includes IGST paid at the time of import. To claim ITC, the importer must:

• Have a valid GST registration.
• Possess a bill of entry containing the GSTIN.
• The IGST must have been paid and the details transmitted by ICEGATE to the GST portal.
• The goods must be used for business purposes.

The ITC will auto‑populate in GSTR‑2A under "Import of Goods". You can then claim it in GSTR‑3B Table 4(A). The ITC can be used to pay your output GST liability. Our ITC guide covers all conditions.

Customs Clearance Process for Importers

The customs clearance process for imports involves:

1. File Bill of Entry: The importer or customs broker files a bill of entry with Customs, declaring the goods, value, HSN code, and GSTIN.
2. Assessment: Customs assesses the duty and IGST payable based on the declaration and supporting documents.
3. Payment of Duty and IGST: The importer pays BCD, SWS, and IGST through the ICEGATE portal or a designated bank.
4. Examination: Customs may physically examine the goods to verify the declaration.
5. Clearance: Once payment is confirmed and examination (if any) is complete, the goods are cleared for delivery.

Ensure your GSTIN is correctly mentioned in the bill of entry, as this is used to transmit IGST data to the GST portal for ITC purposes.

Documents Required for Import of Goods

• Bill of Entry: Filed with Customs.
• Commercial Invoice: From the foreign supplier.
• Packing List.
• Bill of Lading / Airway Bill.
• Import Export Code (IEC).
• GST Registration Certificate.
• Insurance Certificate (if applicable).
• Country of Origin Certificate (if claiming preferential duty).

Maintain all documents for at least 72 months as required by GST and customs law.

GST Return Filing Requirements for Importers

Importers must file regular GST returns:

• GSTR‑1: Report outward supplies. Imports are not reported in GSTR‑1.
• GSTR‑3B: Claim ITC on IGST paid at import in Table 4(A). The import details are auto‑populated from ICEGATE into GSTR‑2A.
• GSTR‑9: Annual return.

Ensure that the ITC claimed in GSTR‑3B matches the auto‑populated data in GSTR‑2A. Any discrepancy can lead to a notice. Our GST return filing guide is a practical resource.

Reporting Import Transactions Under GST

Import transactions are reported in the importer's GST returns primarily through the ITC claim. The bill of entry data flows from ICEGATE to the GST portal and auto‑populates in GSTR‑2A under "Import of Goods". The importer can verify the details and claim ITC in GSTR‑3B. There is no separate reporting of imports in GSTR‑1 because the foreign supplier is not a registered Indian entity. The importer must ensure that the bill of entry details (GSTIN, IGST amount, invoice number) are correct. In case of any mismatch, the ITC may not reflect, and a manual follow‑up with customs may be required.

Common GST Mistakes Made by Importers

GST Compliance Checklist for Importers

• ✅ Obtain GST registration and IEC before importing.
• ✅ Provide your GSTIN to your customs broker for every import shipment.
• ✅ Ensure the bill of entry accurately reflects the GSTIN and IGST paid.
• ✅ Verify that IGST paid on imports appears in GSTR‑2A each month.
• ✅ Claim ITC on imports in GSTR‑3B Table 4(A) – match with GSTR‑2A.
• ✅ Maintain all import documents (bill of entry, invoices, payment proofs) for 72 months.
• ✅ File GSTR‑3B on time, even if you have no domestic sales.
• ✅ Reconcile customs data with GST returns periodically.

Frequently Asked Questions (FAQs) on Import of Goods Under GST

📚 Essential GST Resources for Importers