Overseas trade indices of a nation’s economic growth. India has the fastest growing economy in the entire world. Our nation’s trade is thriving day-by-day. India has exported products worth $274.6 billion in 2016-2017, 4.7% greater than $262.2 billion in the financial year 2016. Trade shortfall in 2016 to 2017 was $105.7 billion.
With the Indian government’s decision to turn out GST (Goods and Services Tax) in 2017, a wave of uneasiness ran through the commercial sector. With the implementation of GST, the way of doing business in India has completely changed in the past one year and impacts the Import and Export of products also.
Before understanding the impact of GST on trade, let’s quickly take a look at the basics of goods and services tax.
GST is a particular tax charged on the supply of products and services from the producer to the buyer. In just 1 year, it has replaced a host of central taxes and duties along with state cesses. Under the goods and services tax routine, credits of input taxes paid at every stage will be present in the consequent stage of price addition.
This tax in India has 3 components!
Let’s explore types of taxes imposed on the Export and Import of products and services:-
- CGST (Central Goods and Services Tax)
- SGST (State Goods and Services Tax)
- IGST (Integrated Goods and Services Tax)
Centre government of India collects CGST and state government collects SGST on all trades in a state. And the last one tax i.e. IGST equals to CGST plus SGST. IGST ensures the movement of the input tax credit from one state to another. According to the GST law, no tax is owed on the export of products and services.
Though, the consequence is different in case of imports under the GST regime:
- Import of products and services will be preserved as inter-state provisions. IGST will be imposed on the import of goods and services into the nation. BCD (Basic Customs Duty) will be also charged on the import of services and goods along with IGST.
- In case of import of services, service collector will be legally responsible to pay the levy on the service if such services are offered by an individual residing outside India.
- Goods and services tax will be followed by the transaction value based valuation principle from the present customs law. IGST will be calculated on the transaction price of the products.
- Levy paid during import will be present as a credit under “Import and Sale” model. As well the refund of SAD (Special Additional Duty) that is present now after doing some particular compliance.
- Levy revenue in case of SGST will be accumulated to the state where the imported products and services are consumed, as goods and services tax is a destination based tax.
With a number of taxes being considered by GST, exports have received a solid boost in the last 1 year. On the other hand, it has reduced the cost of imports.
If you want to know about GST rate tax on the Import and Export of products & services then consult us at SEAIR Exim Solutions.
Export data india 