Indirect Tax Laws · Import and Export Under GST

Import of Goods and Services under GST

Updated 5 October 2026 · Fact-checked

Import under GST means bringing goods into India from outside, or receiving services from a supplier located outside India while the recipient is in India. Imported goods bear customs duty plus IGST. Imported services are generally taxed under reverse charge, with the Indian recipient paying IGST. Check the place of supply first.

Understand Import of Goods and Services under GST

GST treats an import as an inter-State supply. So the tax on imports is always IGST, never CGST or SGST. This keeps the tax with the State of consumption through the IGST settlement system.

Import of goods means bringing goods into India from a place outside India. Here, goods are charged to customs duty under the Customs Act, 1962 and Customs Tariff Act, 1975. On top of that, IGST is levied on the same goods under section 5 of the IGST Act. The manner of levy and the value on which it is charged are set by section 3(7) of the Customs Tariff Act, 1975 read with the Integrated Tax Valuation Rules. This IGST is in addition to the customs duty. It is collected at the time of clearance on the Bill of Entry. The value for IGST is the assessable value (customs value) plus the customs duties levied under the Customs Act and the Customs Tariff Act, such as basic customs duty, SWS and any other duty like safeguard or anti-dumping duty. It excludes IGST itself and compensation cess. Compensation cess is levied separately under the GST (Compensation to States) Act and is not part of the base. IGST is computed on that total.

Import of services means a supply where the supplier is located outside India, the recipient is located in India, and the place of supply is in India (section 2(11) of the IGST Act). All three conditions must be met together. If any one fails, it is not an import of service.

The Indian recipient pays IGST on imported services under reverse charge, under section 5(3) of the IGST Act read with Notification 10/2017-IGST. The exception is OIDAR services (online information and database access or retrieval services) supplied by a person outside India to a non-taxable online recipient in India. There the supplier must register and pay the tax under section 14 of the IGST Act. If the OIDAR service is supplied to a registered person in India, it stays under reverse charge and the recipient pays the IGST. A business recipient can usually claim input tax credit on the IGST paid, subject to the credit conditions. For imports of goods, the importer can claim credit of the IGST paid, but not of the basic customs duty under GST.

Place of supply is the key test for services. Where the supplier or the recipient is located outside India, the place of supply of services is determined under section 13 of the IGST Act. The default rule is the location of the recipient of the services. If that location is not available in the ordinary course of business, the place of supply is the location of the supplier. There are specific rules, for example for performance-based services and services linked to immovable property. Apply the specific rule first. Use the default rule only when no specific rule fits. For goods imported into India, the place of supply is the location of the importer (section 11 of the IGST Act).

An import of services for a consideration is a supply. Under Schedule I of the CGST Act, 2017, an import of services by a person from a related person or from any of his other establishments outside India, in the course or furtherance of business, is also treated as a supply even without consideration.

Key rules to remember

Nature of supply on import: Import of goods or services into India = inter-State supply → IGST; CGST and SGST never apply on imports.
Import of service: conditions: Supplier outside India + Recipient in India + Place of supply in India; All three must be satisfied together.
Assessable value for IGST on imported goods: Value for IGST = Assessable (customs) value + customs duties (BCD + SWS + any other duty such as safeguard or anti-dumping duty), excluding IGST and compensation cess; IGST is computed on this total; IGST is charged on the customs value plus the duties, not on the customs value alone. Compensation cess is levied separately and is not part of the base. Check whether SWS or any other duty applies in the question.
Duty and tax payable at the port on imported goods: Payable at the port = BCD + SWS (if given) + IGST; Follow the order given in the question. SWS is generally calculated on BCD, and IGST comes last. Cash outflow including the price of the goods = Customs value + this amount. Net cost = cash outflow − IGST credit.
Place of supply of imported goods: Location of the importer (section 11, IGST Act); Applies to imports of goods into India.
Tax on imported services: IGST paid by Indian recipient under reverse charge (section 5(3) read with Notification 10/2017-IGST); Exception: OIDAR to a non-taxable online recipient in India, where the supplier registers and pays tax (section 14). OIDAR supplied to a registered person in India stays under reverse charge. The recipient takes ITC if eligible.

How to solve Import of Goods and Services under GST questions

Use this order for any import question, whether it is theory or a case scenario.

1Identify whether the item is goods or services. Services follow a different route.
2For goods, confirm they are brought into India from outside. Mark the customs value and the duties given.
3Calculate basic customs duty on the customs value. Add SWS or other duty only if the question gives it.
4Compute IGST on the sum of value plus duties. Use the IGST rate given. Do not add CGST or SGST.
5For services, test the three conditions: supplier outside India, recipient in India, place of supply in India.
6If the place of supply falls in India, find who pays. Normally the recipient pays IGST under reverse charge. Check whether the service is OIDAR to a non-taxable person, where the supplier pays, and check for any exemption notified.
7State the ITC position. IGST on imports can usually be claimed by a registered business if used for business and not blocked.
8Write the conclusion in provision, facts and conclusion form.

Quickest way: Three-line import check

When to use it: Use this in the exam when a case has several transactions and little time.

Goods in: customs duty plus IGST at the port. Value for IGST includes duty.
Services in: all three conditions, then reverse charge IGST by the recipient (OIDAR to a non-taxable person is the exception).
Finish with ITC: yes if business use and not blocked, no for the basic customs duty.

Common mistakes in Import of Goods and Services under GST

Charging CGST and SGST on imports.
Students carry over the domestic intra-State habit.
Fix: Remember that import is an inter-State supply, so only IGST applies.
Calculating IGST on the customs value alone.
Students forget the IGST base includes the customs duty.
Fix: Add basic customs duty and other duties to the value first, then apply the IGST rate.
Treating a service as an import when the recipient is outside India.
Students look only at the supplier's location.
Fix: Check all three conditions together, especially the recipient's location and the place of supply.
Claiming credit of basic customs duty under GST.
Students think any duty on an import is creditable.
Fix: Only the IGST paid on the import can be claimed as ITC. Customs duty is a cost, subject to specific provisions.
Saying the foreign supplier must always register and collect tax on imported services, or that it never does.
Students ignore the reverse charge position, or forget the OIDAR exception.
Fix: State that the Indian recipient pays IGST under reverse charge (section 5(3) read with Notification 10/2017-IGST). The exception is OIDAR supplied to a non-taxable online recipient in India, where the supplier must register and pay tax under section 14. OIDAR supplied to a registered person in India is still under reverse charge.
Forgetting that an import of services from a related person without consideration can still be a supply.
Students link a supply to payment only.
Fix: Recall the entry in Schedule I of the CGST Act, 2017 covering import of services by a person from a related person or from other establishments outside India, in the course or furtherance of business.

Worked examples

Example 1

Alpha Ltd, a registered manufacturer in Pune, imports a machine from Germany for use in its factory. Customs value is ₹10,00,000. Basic customs duty is 10%. Assume no other duty or cess. IGST rate is 18%. Compute the duty and tax payable at the port and the net cost of the machine, and state whether Alpha can claim credit.

Show the solution

Basic customs duty = 10% × ₹10,00,000 = ₹1,00,000.
Value for IGST = ₹10,00,000 + ₹1,00,000 = ₹11,00,000.
IGST = 18% × ₹11,00,000 = ₹1,98,000.
Duty and tax payable at the port = ₹1,00,000 + ₹1,98,000 = ₹2,98,000. Cash outflow including the price of the machine = ₹10,00,000 + ₹2,98,000 = ₹12,98,000.
Machine is capital goods used in business. The IGST of ₹1,98,000 is creditable, subject to ITC conditions and no block under section 17(5).
Basic customs duty of ₹1,00,000 is not creditable under GST.
Net cost after ITC = ₹12,98,000 − ₹1,98,000 = ₹11,00,000 (customs value plus basic customs duty).

Answer: Duty and tax payable at the port is ₹2,98,000 (BCD ₹1,00,000 and IGST ₹1,98,000). Cash outflow including the price is ₹12,98,000. Alpha can claim ITC of the IGST ₹1,98,000 if conditions are met, but not the customs duty, so the net cost is ₹11,00,000.

Exam tips

In MCQs, first check the location of supplier, recipient and place of supply. Many options differ only on this.
For numerical questions, show duty, IGST base and IGST as three separate lines. This secures working marks.
Write that import is an inter-State supply at the start of any theory answer. It is a quick scoring point.
In a case with several imports, tag each as goods or services before calculating anything.
State the ITC conclusion at the end, separating IGST (creditable) from customs duty (not creditable).

Practice questions from Import and Export Under GST

Import of Goods and Services under GST: frequently asked questions

Is IGST on import of goods a separate tax from customs duty?

Yes. IGST is levied under section 5 of the IGST Act in addition to customs duty on imported goods. It is collected by customs at the time of clearance, and the importer can usually claim ITC of it.

Who pays GST on import of services?

Generally, the Indian recipient pays IGST under reverse charge, under section 5(3) read with Notification 10/2017-IGST. A registered recipient can claim ITC of that IGST if eligible. The exception is OIDAR services supplied to a non-taxable online recipient in India, where the supplier must register and pay tax under section 14. That recipient is not a registered person and cannot claim ITC.

Does import of services always attract GST?

No. It is taxable only if the supplier is outside India, the recipient is in India and the place of supply is in India. Exemptions notified by the government can also apply.

Can I claim ITC on basic customs duty paid on imports?

No. Only the IGST paid on imports is eligible for credit, subject to the conditions for ITC. Basic customs duty is not part of the GST credit chain.