What is the procedure of Import and Export in Gst and custom duty calculation?

216 Views Updated: 26 Aug 2018
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Import means when we bring goods or Services in india from other country its called import . That party who’s bringing goods & Services in India from another country is called an importer. Export means sending of goods or services from India to another country. That seller who sending our manufacturing or trading goods and services to another country is called an exporter. Import and Export of goods & Services are limited by import quotas and mandates from the custom authorities.

GST in India from 1st July 2017 Authority of India have corrected procedures relating to export of goods and services from India. Amendments have been made in different Rules and Regulations relating to Import and Export in order to separate them with the new regulation of GST law.

Accordingly to Goods & services system, exports have been categorized as “zero rated supply” so duties or taxes paid either on inputs goods and services ,export goods/the input tax credit similar to goods and services consumed in goods exported under LUT/BOND are to be refunded. Two option for making import and export/ iec code online under bond followed by refund of Input Tax Credit (ITC) or payment of Integrated Goods & Service Tax (IGST) and then refund of the same.

Goods & Service Tax (IGST) means tax levied under the Act on the supply of any goods or services in the course of Inter-State trade or commerce. Input tax credit on the other side is credit manufacturers receive for paying input taxes towards inputs used in the manufacture of products. If a dealer has bought goods for resale, he is completely to input tax credit. LUT /BOND is a document by which the taxpayer declares that he shall accomplish the requirements of the GST law with regard to export. By submitting this document to the department.only that taxpayer can export without payment of IGST. one registered person is eligible for submission of LUT (letter of undertaking) if he has received the foreign inward remittance amounting to a minimum of 10% of the export turnover and which should not be less than one (1 Crore) in the preceding financial year.

import and export from an SEZ is “Zero Rated” import under GST and is deemed to be Interstate trade or commerce. Import duty on a product will be calculated on the basis of Basic Custom Duty(BCD), Integrated Goods and Service Tax (IGST) and Compensation Cess.

Compensation Cess is a new cess applicable on some specked items. The reason being GST is a destination cum consumption based tax. Therefore, the revenue from these taxes will occur to the state where the goods are ultimately consumed. As a result, there are some losses to a few manufacturing states and benekts to the consuming state. This is because revenue goes to the treasury of the consuming states only. In order to compensate states from this kind of probable loss, this cess has been introduced to be levied on luxury items like high end cars, demerit goods including tobacco, pan masala and aerated drinks. This cess is applicable for a period of 5 years from the date of implementation of GST.

The calculation of Import Duty can be easily illustrated with the following example of Memory Card imported into India. Let us assume that the assessable value of Brand Memory Card is Rs.500. Then the total import duty will be as follows:

(1) Basic Custom Duty (BCD) = 7.5% of 500 = 37.50

(2) Compenstion Cess =0% of (Assessable value + BCD)

=0% of (500+7.5) = 0 (Nil)

(3) Social Welfare Surcharge (SWFS) if applicable on goods than its value

=10% of BCD (37.50) = 3.75

(4) IGST =18% OF (ASSESSABLE VALUE + BCD + COMPENSTION CESS + SWFS )

    (37.50 + 0 + 3.75 x 18 % = 7.42 )

Total custom duty at import Goods and Services

          37.50 + 0 + 3.75 + 7.42 = 48.67

As illustrated in the example above, the total import duty to be paid is Rs. 28.05 Other updates in the Act as follows:

In imports, there is no impact on the levy of BCD, Education Cess, Anti-dumping duty, Safeguard duty and the like. However, IGST replaces the Additional duties of Customs [i.e. Countervailing Duty (CVD) and Special Additional duty of Customs (SAD)]. In exports, as mentioned before, it will be treated as zero-rated supply.

There are seven rates prescribed for IGST – Nil, 0.25%, 3%, 5%, 12%, 18% and 28%. The actual rate applicable to an item would depend on its classification and can be referred to in Schedules notified under section 5 of the IGST Act, 2017. The rates applicable to a few of the goods of Chapter 98 are as follows:

Printing Machines – 18%

Paper Bag making machine – 18%

Laboratory Chemicals – 18%

Passenger Baggage – Nil

Drugs and medicines for personal use – 5%

Other drugs and medicines for personal use – 12%

All other dutiable goods for personal use – 28%

GSTIN would be used for credit flow of IGST paid on import of goods. PAN will be the Import Export Code online (IEC ONLINE). In cases where GSTIN is not applicable, UIN or PAN will be accepted as IEC. In due course of time, IEC ONLINE will be replaced by PAN/GSTIN.

The GST low has simplified the export and import procedures, which was earlier tedious. The export industry in India would be able to have internationally competitive prices due to the smooth process of claiming input tax credit and the availability of input tax credit on services.

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