INTRODUCTION : The main objective of this article is to
bring out clarity on implications of GST implementation for importers &
exporters. In case of Imports, there will be no effect on levy of BCD,
Education Cess, Anti Dumping Duty, Safeguard Duties etc. However, CVD & SAD
shall be replaced by IGST except a few cases.
In case of Exports IGST paid on exports or Input Tax Credit paid on exports shall be
refunded.
1. IMPORT OF GOODS & SERVICES IN
INDIA.
I.
Implication of GST for Importers
a) Taxes to be levied : Under GST
regime, Importers would be liable to pay IGST & GST compensation cess by
virtue of sub sections 7 & 9 of Section 3 of Customs Tariff Act, 1975.
b)
Time of levy : IGST &
GST Compensation cess shall be levied on
i.
Cargo
arriving at the Customs Station of India on or after 1st July, 2017 or
ii.
Cargo
arrived prior to 1st July, 2017 but Bill of Entry is filed on or after 1st July
2017.
But in case Cargo is received
after July 1, 2017 & Bill of Entry has been filed in advance by the
importer, then Proper Officer may recall the bill of entry & reassess the
same for levy of IGST & GST Compensation cess.
c)
Non Levy of IGST & GST Compensation Cess Tobacco
products such as Pan Masala & certain other Petroleum products have been
kept outside the purview of IGST & GST compensation cess.
II.
Calculation of Duties to be paid by Importers.
a) Levy of IGST: IGST shall be levied on value of imported
goods.
b) Value of Imported Goods shall include :
i.
Value of Imported Article determined u/s 14(1) of Customs Tariff Act,
1962 or Tariff value fixed u/s 14(2) of Customs Tariff Act & will also
include
ii.
Any Other Duty
of Customs chargeable on such article u/s
12 of Customs Act, 1962 & any other tax chargeable under any other law except
GST.
Value of
Imported Goods = Assessable Value + Basic Custom Duty + Other
Tax Chargeable under
any other law other than GST.
Accordingly,
Anti Dumping Duties, Safeguard Duties, Education Cess or Higher Education Cess shall be included in value of
imported goods for calculation of GST.
However,
IGST so calculated shall not added to the value of goods for levy of GST Compensation cess.
III.
Changes in Import procedures under GST.
a) GSTIN to be quoted on Bills of Entry: Under GST Regime, GSTIN no. shall be used
for claiming ITC of IGST paid on import of goods. Accordingly , DGFT has
advised that all importers need to quote GSTIN in their bills of entry in
addition to Import Export Code.
b) PAN to be treated as Export Import
Code by DGFT: DGFT in Trade Notice No. 09 dated
12.06.2017 has stated that PAN would be the Export Import Code (IEC).
Under
GST regime, while PAN is the identifier at entity level, GSTIN is the
identifier at transaction level.
Modified Formats of Bill of Entry: To capture
additional details as mentioned above such as GSTIN, IGST Rate &
amount, GST compensation cess & amount,
Electronic as well as manual formats of Bill of Entry & Courier Bill of
Entry are being updated on the website of Customs dept. i.e. www.cbec.gov.in
IV.
Imports under Export Promotion Schemes & Duty payment through Duty
Scrips.
a) Exemption of Custom Duties on Exports:
Custom duties shall be exempted
on imports made under Export promotion schemes namely EPCG, DEEC (Advance
License)& DFIA.
b) No Exemption for IGST &
Compensation Cess: IGST &
GST Compensation cess need to be paid on such imports.
c)
Scrips under MEIS & SEIS not to be used for Duties on goods covered by
GST.
The
EXIM scrips under MEIS and SEIS can be utilized only for payment of Custom
Duties or Additional Duties of Customs, on items not covered by GST, at the
time of Import.
The
scrips cannot be utilized for payment of IGST & Compensation Cess.
Similarly, scrips cannot be used for payment of CGST, SGST or IGST for domestic
procurements.
V.
Import of Goods by EOU's & SEZ.
a) IGST & GST Compensation Cess need
to be paid by EOU's & STP's
EOU's
& STP's shall have to pay IGST &
GST Compensation Cess which can later be claimed as Input Tax Credit (ITC).
However,
EOU's & STP's will continue to import goods without payment of BCD as well
as other import duties.
b) Utilization of IGST Input.
The
Input of IGST paid under import of goods shall be utilized in the following
manner:
i.
Utilization for payment of GST: The input
credit mentioned above shall be utilized
for payment of GST on goods cleared in DTA.
Any clearance of goods meant for export in
DTA shall will attract GST besides payment of equal amount of BCD exemption
alraedy availed on inputs used in such finished goods.
VI.
Import of Goods by SEZ units.
There has been no change in SEZ
scheme due to roll out of GST. Authorized operations are exempted from payment
of input duties under GST.
VII.
Passenger Baggage: Full
exemption of IGST has been allowed on passenger baggage. However, BCD plus
education cess shall be levied @ 35% on value of baggage in excess of duty free
baggage allowed under Baggage Rules, 2016.
VIII.
Input Tax Credit under Imports: ITC of IGST &
GST Compensation cess shall be available to importer & other recipients in
supply chain. However, no Credit of BCD will be available as was the case in
earlier regime.
Following conditions
need to be satisfied for claiming ITC of GST:
a) Declaration
of GSTIN in Bill of Entry.
b) Declaration of Provisional ID in BOE till
GSTIN is allotted during transitional phase of GST.
c) Availability of prescribed particulars in
Invoice as specified by Invoice Rules.
d) Declaration of by such person in Form GSTR 2.
2. Export of Goods & Services in
India.
I.
Refund of IGST paid on Exports & Exports under Bond Scheme.
IGST paid by an exporter shall be
allowed as a refund to the exporter under either of the following options:
a) Supply of Goods under Bond or Letter
of Undertaking without payment of Duty & claiming refund of unutilized ITC.
i.
The exporter
claiming refund of ITC shall file an application through common portal directly
or indirectly through common portal notified by GST Commissioner.
ii.
Application
for refund shall be filed only after the export manifest or an export report,
as the case may be, is delivered under section 41 of the Customs Act, 1962 in
respect of such goods.
b) Supply of Goods & Services on
payment of IGST & claim refund of such tax paid.
i.
Under this
option, the shipping bill filed by an exporter shall be deemed to be an
application for refund of IGST paid on the goods exported out of India &
ii.
such
application shall be deemed to have been filed only when the person in charge
of the conveyance carrying export goods duly :
a)
files an
export manifest or an export report covering the number &
b)
the date of
Shipping Bills or Bills of Export and the applicant has furnished a valid
return.
II.
Duty Drawback Scheme.
There has been very negligible
changes under Duty Drawback provisions (Section 74 & 75) of Customs Act,
1962 under GST regime. Concept of All Industry Rate (AIR) & Brand Rate
under Section 75 shall also continue to remain in force.
a) Custom Duties, IGST & GST
Compensation Cess to be Refunded: Duty
Drawback under Section 74 shall refund Custom Duties as well as IGST & GST
compensation cess on imported goods which are to be re exported.
b) Drawback to be limited to Custom
Duties on Imported Goods: Under GST
Regime, duty drawback shall be limited to custom duties on imported goods &
Central Excise duty shall be refunded under duty drawback scheme only in case
of inputs & fuels used for captive power generation i.e. items specified
under IV th Schedule to Central Excise Act, 1944.
c)
Transitional Period of 3 months from date of GST implementation i.e. 1st
July 2017.
i.
Old Scheme to be applicable for first 3 months: During this transitional period of 3 months,
provisions of existing duty drawback scheme shall continue to be applicable.
ii.
Duty Drawback claim at a Higher Rate :
For exports during this period exporters can claim higher drawback (AIR Rate) subject to the conditions
that no IGST & CGST is claimed & no refund of IGST paid on exports is
claimed & no CENVAT Credit of IGST paid is carried forward. These higher rate of duty drawback are yet to
be notified by the Govt.
iii.
Declaration by Exporter & Certificate from Jurisdictional GST Officer.
These certificates will help in prevention
of double neutralization of input taxes.
Contributed by team GST at Sandeep Ahuja & Co
