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Direct and Indirect Taxation · Introduction to GST Law

Levy and Collection of IGST on Imports of Goods and Services

Updated 10 October 2026 · Fact-checked

An import of goods or services into India is treated as an inter-State supply and attracts IGST. On goods, IGST is collected by customs along with customs duty, on a value that includes the duty. On imported services, the Indian recipient pays IGST under reverse charge and may claim input tax credit if eligible.

Understand Levy and Collection of IGST on Imports

GST has two parts for a supply: CGST plus SGST for intra-State supplies, and IGST for inter-State supplies. An import crosses India's border, so it is treated as an inter-State supply. That is why IGST, not CGST or SGST, applies to imports.

For imported goods, the tax is collected at the port, airport or land customs station when the goods are cleared. IGST is charged on the value of the goods plus the customs duties levied on them. This is why IGST is calculated on top of basic customs duty. The importer pays it in the bill of entry. A registered importer can usually claim it as input tax credit.

For imported services, no customs officer collects the tax. The supplier is outside India and usually not registered here. So the law shifts the liability to the Indian recipient under reverse charge. The recipient pays IGST in cash through the electronic cash ledger, and then may take credit if the service is used for business and the credit is not blocked.

The official text supplied for this page is Section 9 of the CGST Act, 2017. It is the intra-State charging section. It levies CGST on intra-State supplies at notified rates not exceeding twenty per cent, and sub-section (3) lets the Government notify supplies on which the recipient pays tax under reverse charge. The IGST Act has a matching charging provision for inter-State supplies and imports. Use that parallel when you answer. Do not quote section numbers of the IGST Act unless you are sure of them.

The key contrast for exams: intra-State supply attracts CGST plus SGST, inter-State supply (including import) attracts IGST. Look at the supplier's location and the place of supply to decide which applies.

Key rules to remember

Assessable value of imported goods
Assessable value = Transaction value (CIF) + other loadable costs
CIF means cost, insurance and freight up to the Indian port. Use the value the question gives as assessable value.
Value for IGST on imported goods
IGST value = Assessable value + Basic customs duty + Other customs duties (such as social welfare surcharge)
IGST is charged on this total, so customs duty is in the base. Include only duties the question says are levied.
IGST on imported goods
IGST = IGST value × IGST rate ÷ 100
Rate is given in the question. Do not add CGST or SGST.
Social welfare surcharge
SWS = Rate % × Basic customs duty
Charged on the duty, not on the goods value. Apply it only if the question states it.
Reverse charge on imported services
IGST payable by recipient = Value of service × IGST rate ÷ 100
Paid in cash by the Indian recipient. Credit may follow if eligible.
Nature of supply
Import = inter-State supply → IGST; intra-State supply → CGST + SGST
Section 9 of the CGST Act levies tax on intra-State supplies, with reverse charge under sub-section (3).

How to solve Levy and Collection of IGST on Imports questions

Use the same order for every import question. It stops you missing the customs duty in the IGST base.

  1. 1Identify whether the import is of goods or of services.
  2. 2For goods, take the assessable value (CIF) given in the question. Convert foreign currency at the exchange rate stated.
  3. 3Compute basic customs duty on the assessable value. Add any surcharge such as social welfare surcharge on the duty.
  4. 4Add all duties to the assessable value to get the value for IGST.
  5. 5Apply the IGST rate to that total. Show the figure as IGST payable at the port.
  6. 6For services, find the recipient and confirm the supplier is outside India. IGST is payable by the recipient under reverse charge on the value of the service.
  7. 7State the input tax credit position: eligible if used for business and not blocked, and the tax is actually paid.
  8. 8Write the final answer clearly: customs duty, IGST and total payable.

Quickest way: Add duty first, then IGST

When to use it: Use this for numerical import questions with customs duty and IGST in a short time.

  1. Write: Assessable value, then Basic customs duty, then Surcharge if any.
  2. Total them. This total is the base for IGST.
  3. Multiply the total by the IGST rate.
  4. For imported services, skip customs: multiply the service value by the IGST rate and mark it as reverse charge.
  5. Add one line on ITC eligibility.

Common mistakes in Levy and Collection of IGST on Imports

  • Charging IGST on the assessable value alone

    Students treat IGST like a simple tax on the invoice price.

    Fix: Add basic customs duty and any surcharge to the assessable value first. IGST applies to that total.

  • Charging CGST and SGST on imports

    Students think the importer is in one State, so the supply is intra-State.

    Fix: An import is treated as an inter-State supply. Only IGST applies.

  • Treating import of services as the supplier's liability

    The usual rule is that the supplier pays tax.

    Fix: The supplier is outside India. The Indian recipient pays IGST under reverse charge. Section 9(3) of the CGST Act gives the same idea for intra-State supplies.

  • Calculating surcharge on the goods value

    Students forget the surcharge is on the duty.

    Fix: Compute surcharge as a percentage of basic customs duty, then add it to the base.

  • Assuming ITC is automatic

    Students remember that IGST on imports is creditable.

    Fix: Credit needs business use, no blocking, and actual payment. State these conditions in the answer.

  • Quoting section numbers from memory

    Students want the answer to look precise.

    Fix: Quote only sections you are sure of. A correct rule in plain words earns marks.

Worked examples

Example 1

Rao Textiles Pvt Ltd, Surat, imports machinery with an assessable value of ₹10,00,000. Basic customs duty is 10%. Social welfare surcharge is 10% of the basic customs duty. IGST rate is 18%. Compute the IGST payable at the port.

Show the solution
  1. Basic customs duty = 10% × ₹10,00,000 = ₹1,00,000.
  2. Social welfare surcharge = 10% × ₹1,00,000 = ₹10,000.
  3. Value for IGST = ₹10,00,000 + ₹1,00,000 + ₹10,000 = ₹11,10,000.
  4. IGST = 18% × ₹11,10,000 = ₹1,99,800.
  5. Total paid at the port = ₹1,00,000 + ₹10,000 + ₹1,99,800 = ₹3,09,800.

Answer: IGST payable is ₹1,99,800. Total paid at the port is ₹3,09,800. Rao Textiles may claim the IGST as input tax credit if the machinery is used for business and the conditions are met.

Example 2

Kumar Exports Ltd, Chennai, is registered under GST. It receives consultancy services from a firm in Singapore. The value is ₹5,00,000. IGST rate is 18%. State who pays the tax, compute it, and explain the credit.

Show the solution
  1. The service comes from a supplier outside India, so it is an import of service and is treated as an inter-State supply.
  2. The supplier is outside India. The recipient, Kumar Exports Ltd, pays IGST under reverse charge.
  3. IGST = 18% × ₹5,00,000 = ₹90,000.
  4. The tax is paid through the electronic cash ledger.
  5. Once paid, Kumar Exports Ltd may claim credit of ₹90,000 if the service is used in its business and the credit is not blocked.

Answer: Kumar Exports Ltd pays IGST of ₹90,000 under reverse charge. It can claim input tax credit of ₹90,000 subject to business use and the credit not being blocked.

Exam tips

  • In goods problems, always show the IGST base as a total line. Step marks go to that line.
  • Write 'import is treated as inter-State supply' in the first line of theory answers.
  • For services, name the recipient as the person liable and say 'reverse charge'.
  • Do not add CGST or SGST to an import answer. Examiners treat it as a concept error.
  • In MCQs on import, read the options for IGST with and without duty in the base. The correct one includes duty.

Practice questions from Introduction to GST Law

Levy and Collection of IGST on Imports in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Levy and Collection of IGST on Imports: frequently asked questions

Why is IGST charged on imports and not CGST and SGST?

An import is treated as an inter-State supply because the goods or services come from outside India. Inter-State supplies attract IGST. CGST and SGST apply to intra-State supplies, as in Section 9 of the CGST Act.

Is customs duty included in the value for IGST on imported goods?

Yes. IGST on imported goods is charged on the assessable value plus the customs duties levied. So duty is part of the base, and IGST is computed on that total.

Who pays IGST on import of services?

The Indian recipient pays it under reverse charge, since the supplier is outside India. The tax is paid in cash. The recipient can then claim input tax credit if the service is for business and the credit is not blocked.

What is the difference between inter-State and intra-State supply?

An intra-State supply is within one State and attracts CGST plus SGST. An inter-State supply crosses State lines, and imports are treated as inter-State. Inter-State supplies attract IGST.