You must have heard about the GST (Goods and Services Tax). It was not easy for all to deal with the consequences of the introduction of the GST. Likewise, it affected import export business as well. Further in this blog we will discuss the role of GST registration in Import export license.
By virtue of GST implementation in India, there are following implications on imports:
- Inter-state supply
If you import any goods and services from outside India, then it will be considered as Inter-state supply under model GST law. And according to this, it will attract Integrated Service Tax (IGST) along with BCD and other surcharges.
- Importing services from outside of India
In accordance with the GST registration in India, the consumers are liable to pay the taxes, if the service provider resides outside India. It is similar to the reverse charge mechanism, in which the consumers have to pay taxes and file returns.
- Transaction value based valuation principle
Transaction based valuation principal is similar to the current customs law for charging GST. Earlier the CVD (Countervailing Duty (CVD) is an additional import duty charged on imported goods.) was charged on the MRP valuation system, however if we look at the new GST regime, CVD is included in the IGST and will be charged on the transaction value.
- Refund of duty under new online GST registration regime
Earlier there used to be a credit under “Import and Sale” model, while there is no such credit is available in the present GST.
- Current Exemption Withdrawal
Currently, there are multiple exemption notifications on customs import tariff which are likely to be reviewed / withdrawn / converted into a refund mechanism. Therefore the structure of export-linked duty exemption schemes could exchange under the FTP. While the duty exemptions will get exemption from payment of BCD but not from the payment of IGST. This will change the viability of the key schemes under the FTP like EOU, STP, Advance authorization etc.