CA Sandeep Manik
India is one of the fastest growing global economy and in the way to becoming the new global manufacturing hub. While manufacturing activities are on rising, we are also witnessing expansion in foreign trade both imports and exports.
IMPACT ON IMPORTS
As per the Model GST Law, GST will subsume Countervailing Duty (CVD) and Special Additional Duty (SAD), however, Basic Customs Duty will continue to do its round in the import bills. BCD has been kept outside the purview of GST and will be charged as per the current law only.
Below are some of the implications for imports and importers by virtue of GST implementation in India:
Tax structure and ITC in the case of imports:
Since the import of goods/services would be deemed as the inter-state supply of goods and thus shall be subjected to the levy of IGST. However, the import of goods shall continue to attract Basic Customs Duty (BCD) in addition to IGST.
In GST model, transaction value includes any taxes, duties, fees and charges levied under any other statute. It means while calculating IGST on imports, BCD should be added to the transaction value of imports.
The manufacturer, service provider and trader of goods who imports goods/services shall be eligible to offset IGST paid on import of goods/services against his output liability. However, the credit of BCD will not be available under proposed GST law as well.
IMPACT ON EXPORTS
The supply of any service shall be treated as “export of service” when
Tax structure and ITC in the case of exports:
GST shall not be charged on goods/services exported from India. In Case, the supply of goods qualifies as export out of India as per the Place of Supply Rules the transaction shall be treated as “zero-rated supply”.
The supplier shall be allowed to export the goods/services without charging any tax and can avail the CGST/SGST and IGST credits paid on inputs and input services. If he is unable to utilize the credit then he can go for refund of credits as per Central GST Act.
|TYPE OF SUPPLY|
|TAX STRUCTURE||IGST AND BASIC CUSTOM DUTY SHALL BE LEVIED ON TRANSACTION VALUE||ZERO RATED SUPPLY. NO IGST WOULD BE CHARGED|
|INPUT TAX CREDIT||ITC OF IGST ALLOWED AND ITC OF BCD NOT ALLOWED||GST CREDITS PAID ON INPUTS AND INPUT SERVICES IS ALLOWED AND IF HE IS UNABLE TO UTILISE THE CREDITS THEN HE CAN APPLY FOR REFUND|