{"id":37097,"date":"2026-07-02T09:48:00","date_gmt":"2026-07-02T04:18:00","guid":{"rendered":"https:\/\/blogrevamp.cashfree.com\/?p=37097"},"modified":"2026-07-01T20:53:39","modified_gmt":"2026-07-01T15:23:39","slug":"gst-on-imports-customs-duty","status":"publish","type":"post","link":"https:\/\/blogrevamp.cashfree.com\/gst-on-imports-customs-duty\/","title":{"rendered":"GST on Imports in India: How IGST on Customs Duty Is Calculated &#038; ITC Eligibility"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_81 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a8f1a6fb3d56\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #364250;color:#364250\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #364250;color:#364250\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a8f1a6fb3d56\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/blogrevamp.cashfree.com\/gst-on-imports-customs-duty\/#What_Is_GST_on_Imports_How_IGST_Applies_to_Imported_Goods\" >What Is GST on Imports? How IGST Applies to Imported Goods<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/blogrevamp.cashfree.com\/gst-on-imports-customs-duty\/#How_the_Import_Tax_Structure_Changed_After_GST\" >How the Import Tax Structure Changed After GST<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/blogrevamp.cashfree.com\/gst-on-imports-customs-duty\/#Types_of_Taxes_Applicable_on_Imported_Goods\" >Types of Taxes Applicable on Imported Goods<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/blogrevamp.cashfree.com\/gst-on-imports-customs-duty\/#Why_Is_IGST_Charged_on_Imported_Goods\" >Why Is IGST Charged on Imported Goods?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/blogrevamp.cashfree.com\/gst-on-imports-customs-duty\/#How_IGST_on_Imports_Is_Calculated_Formula_Components_Example\" >How IGST on Imports Is Calculated: Formula, Components &amp; Example<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/blogrevamp.cashfree.com\/gst-on-imports-customs-duty\/#Why_Isnt_IGST_Calculated_Only_on_the_Invoice_Value\" >Why Isn&#8217;t IGST Calculated Only on the Invoice Value?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/blogrevamp.cashfree.com\/gst-on-imports-customs-duty\/#Common_Mistakes_While_Calculating_Import_IGST\" >Common Mistakes While Calculating Import IGST<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/blogrevamp.cashfree.com\/gst-on-imports-customs-duty\/#Input_Tax_Credit_ITC_on_IGST_Paid_at_Customs_What_You_Can_Claim\" >Input Tax Credit (ITC) on IGST Paid at Customs: What You Can Claim<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/blogrevamp.cashfree.com\/gst-on-imports-customs-duty\/#Import_of_Services_How_GST_Applies_Under_the_Reverse_Charge_Mechanism\" >Import of Services: How GST Applies Under the Reverse Charge Mechanism<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/blogrevamp.cashfree.com\/gst-on-imports-customs-duty\/#GST_Exemptions_on_Imports_Goods_That_Are_Not_Taxed\" >GST Exemptions on Imports: Goods That Are Not Taxed<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/blogrevamp.cashfree.com\/gst-on-imports-customs-duty\/#What_Changed_After_September_2025_GST_Council_Updates_on_Imports\" >What Changed After September 2025: GST Council Updates on Imports<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/blogrevamp.cashfree.com\/gst-on-imports-customs-duty\/#How_to_Pay_IGST_on_Imports_The_Process_at_Customs\" >How to Pay IGST on Imports: The Process at Customs<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/blogrevamp.cashfree.com\/gst-on-imports-customs-duty\/#Conclusion\" >Conclusion<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/blogrevamp.cashfree.com\/gst-on-imports-customs-duty\/#FAQs\" >FAQs<\/a><\/li><\/ul><\/nav><\/div>\n\n<p class=\"has-text-align-center wp-block-paragraph\"><em>GST on imports refers to the Integrated Goods and Services Tax (IGST) charged on goods and services entering India from another country. Imported goods are treated as inter-state supplies under the IGST Act, meaning IGST is collected during customs clearance in addition to applicable customs duties. Eligible businesses can claim the IGST paid as Input Tax Credit (ITC), helping reduce their overall GST liability.<\/em><\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<p class=\"wp-block-paragraph\">Each time goods enter India from another country, taxation occurs, and with the implementation of GST in 2017, there have been some changes in terms of the structure of such taxes. There is custom duty, but there is also an additional layer of IGST, which is computed cumulatively based on the custom duty.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This poses quite a challenging situation to importers, but once the principles of calculation are understood, everything becomes much easier. This section covers IGST on imported goods, qualification for Input Tax Credit, import of services, and implications of new GST notifications from September 2025.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_Is_GST_on_Imports_How_IGST_Applies_to_Imported_Goods\"><\/span>What Is GST on Imports? How IGST Applies to Imported Goods<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">All goods imported into India are subject to Integrated Goods and Services Tax (IGST) under the <a href=\"https:\/\/www.cashfree.com\/blog\/what-is-gst-goods-and-service-tax\/\"><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-cyan-blue-color\">Goods and Services Tax (GST) framework<\/mark><\/a>. Unlike domestic transactions, where GST is split into <a href=\"https:\/\/www.cashfree.com\/blog\/what-is-cgst-central-goods-and-services-tax\/\"><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-cyan-blue-color\">CGST<\/mark><\/a> and <a href=\"https:\/\/www.cashfree.com\/blog\/what-is-sgst\/\"><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-cyan-blue-color\">SGST<\/mark><\/a> (or IGST for inter-state supplies), imports are always treated as inter-state supplies under the Integrated Goods and Services Tax (IGST) Act, 2017. As a result, IGST is collected by customs authorities at the time of customs clearance, along with applicable customs duties.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The objective of <a href=\"https:\/\/www.cashfree.com\/blog\/what-is-igst\/\"><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-cyan-blue-color\">charging IGST<\/mark><\/a> on imports is to ensure tax neutrality between imported and domestically manufactured goods. Since similar products sold within India are already subject to GST, imported goods are taxed at the same <a href=\"https:\/\/www.cashfree.com\/blog\/new-gst-rates\/\"><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-cyan-blue-color\">applicable GST rate<\/mark><\/a> to create a level playing field for domestic businesses.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_the_Import_Tax_Structure_Changed_After_GST\"><\/span>How the Import Tax Structure Changed After GST<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Before the implementation of GST in July 2017, importers were required to pay multiple indirect taxes on imported goods, including:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Basic Customs Duty (BCD)<\/strong><\/li>\n\n\n\n<li><strong>Countervailing Duty (CVD)<\/strong><\/li>\n\n\n\n<li><strong>Special Additional Duty (SAD)<\/strong><\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">With the introduction of GST:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Countervailing Duty (CVD) and Special Additional Duty (SAD) were subsumed into Integrated GST (IGST).<\/li>\n\n\n\n<li>Basic Customs Duty (BCD) continues to be levied under the Customs Act and remains payable on imported goods.<\/li>\n\n\n\n<li>Social Welfare Surcharge (SWS), where applicable, is calculated as a percentage of BCD.<\/li>\n\n\n\n<li>IGST is then calculated on the cumulative taxable value, which includes the assessable value, BCD, and applicable surcharge.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">This simplified the indirect tax structure while allowing eligible businesses to <a href=\"https:\/\/www.cashfree.com\/blog\/input-tax-credit-gst\/\"><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-cyan-blue-color\">claim Input Tax Credit (ITC)<\/mark><\/a> on the IGST paid during import.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Types_of_Taxes_Applicable_on_Imported_Goods\"><\/span>Types of Taxes Applicable on Imported Goods<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><tbody><tr><td><strong>Tax<\/strong><\/td><td><strong>Purpose<\/strong><\/td><td><strong>ITC Available?<\/strong><\/td><\/tr><tr><td>Basic Customs Duty (BCD)<\/td><td>Customs duty levied under the Customs Act<\/td><td>No<\/td><\/tr><tr><td>Social Welfare Surcharge (SWS)<\/td><td>Surcharge calculated on BCD<\/td><td>No<\/td><\/tr><tr><td>Integrated GST (IGST)<\/td><td>GST charged on imported goods<\/td><td>Yes, subject to eligibility<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p class=\"wp-block-paragraph\"><strong>Key Point: <\/strong>While IGST can generally be claimed as Input Tax Credit (ITC) by eligible GST-registered businesses, BCD and SWS become part of the import cost and cannot be claimed as GST credit.<\/p>\n<\/blockquote>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Why_Is_IGST_Charged_on_Imported_Goods\"><\/span>Why Is IGST Charged on Imported Goods?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">IGST is charged on imports to ensure that imported goods are taxed in the same manner as goods supplied within India. Without IGST, imported products could gain a pricing advantage over domestically manufactured goods, leading to an uneven tax structure.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Charging IGST on imports also maintains the continuity of the GST credit chain. Businesses that import goods for further supply, manufacturing, or commercial use can generally claim the IGST paid at customs as Input Tax Credit, preventing tax cascading and reducing the overall tax burden.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_IGST_on_Imports_Is_Calculated_Formula_Components_Example\"><\/span>How IGST on Imports Is Calculated: Formula, Components &amp; Example<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<figure class=\"wp-block-image size-large\"><img data-recalc-dims=\"1\" fetchpriority=\"high\" decoding=\"async\" width=\"683\" height=\"1024\" data-attachment-id=\"37115\" data-permalink=\"https:\/\/blogrevamp.cashfree.com\/gst-on-imports-customs-duty\/igst-calculation-flow-for-imports\/\" data-orig-file=\"https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2026\/07\/IGST-calculation-flow-for-imports.png?fit=1024%2C1536&amp;ssl=1\" data-orig-size=\"1024,1536\" data-comments-opened=\"0\" data-image-meta=\"{&quot;aperture&quot;:&quot;0&quot;,&quot;credit&quot;:&quot;&quot;,&quot;camera&quot;:&quot;&quot;,&quot;caption&quot;:&quot;&quot;,&quot;created_timestamp&quot;:&quot;0&quot;,&quot;copyright&quot;:&quot;&quot;,&quot;focal_length&quot;:&quot;0&quot;,&quot;iso&quot;:&quot;0&quot;,&quot;shutter_speed&quot;:&quot;0&quot;,&quot;title&quot;:&quot;&quot;,&quot;orientation&quot;:&quot;0&quot;,&quot;alt&quot;:&quot;&quot;}\" data-image-title=\"IGST calculation flow for imports\" data-image-description=\"\" data-image-caption=\"\" data-large-file=\"https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2026\/07\/IGST-calculation-flow-for-imports.png?fit=683%2C1024&amp;ssl=1\" src=\"https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2026\/07\/IGST-calculation-flow-for-imports.png?resize=683%2C1024&#038;ssl=1\" alt=\"\" class=\"wp-image-37115\" srcset=\"https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2026\/07\/IGST-calculation-flow-for-imports.png?resize=683%2C1024&amp;ssl=1 683w, https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2026\/07\/IGST-calculation-flow-for-imports.png?resize=200%2C300&amp;ssl=1 200w, https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2026\/07\/IGST-calculation-flow-for-imports.png?resize=768%2C1152&amp;ssl=1 768w, https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2026\/07\/IGST-calculation-flow-for-imports.png?w=1024&amp;ssl=1 1024w\" sizes=\"(max-width: 683px) 100vw, 683px\" \/><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">IGST on imports does not apply to just the declared invoice price. The taxable base is built in layers, which is the part most importers find confusing. Below is the standard calculation structure:<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><tbody><tr><td><strong>Component<\/strong><\/td><td><strong>Description<\/strong><\/td><\/tr><tr><td>Assessable Value<\/td><td>CIF value (Cost + Insurance + Freight) converted to INR<\/td><\/tr><tr><td>Basic Customs Duty (BCD)<\/td><td>Applied on the assessable value<\/td><\/tr><tr><td>Social Welfare Surcharge (SWS)<\/td><td>10% of BCD<\/td><\/tr><tr><td>IGST Taxable Value<\/td><td>The cumulative base on which IGST applies<\/td><\/tr><tr><td>IGST Rate<\/td><td>Rate applicable to the goods<\/td><\/tr><tr><td>IGST Payable<\/td><td>Final IGST amount due<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h4 class=\"wp-block-heading\"><strong>IGST Calculation Formula<\/strong><\/h4>\n\n\n\n<div class=\"wp-block-columns is-layout-flex wp-container-core-columns-is-layout-8f761849 wp-block-columns-is-layout-flex\">\n<div class=\"wp-block-column is-layout-flow wp-block-column-is-layout-flow\" style=\"flex-basis:100%\">\n<p class=\"wp-block-paragraph\"><span class=\"highlight\">IGST Payable = (Assessable Value + Basic Customs Duty + Social Welfare Surcharge + Other Applicable Duties) \u00d7 Applicable IGST Rate<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This is the standard formula followed by Indian Customs while assessing imported goods.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Example:<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Assessable value of imported goods: \u20b91,00,000 Basic Customs Duty (10%): \u20b910,000 Social Welfare Surcharge (10% of BCD): \u20b91,000 IGST taxable value: \u20b91,11,000 IGST at 18%: \u20b919,980<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Total payable at customs: \u20b910,000 (BCD) + \u20b91,000 (SWS) + \u20b919,980 (IGST) = \u20b930,980<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The IGST amount of \u20b919,980 is available as Input Tax Credit to a registered importer.<\/p>\n<\/div>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Why_Isnt_IGST_Calculated_Only_on_the_Invoice_Value\"><\/span>Why Isn&#8217;t IGST Calculated Only on the Invoice Value?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Many first-time importers assume that IGST applies only to the declared value of the goods. However, customs valuation rules require IGST to be calculated on the aggregate import value, which includes applicable customs duties and surcharges.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This methodology ensures:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Uniform taxation of imported and domestic goods.<\/li>\n\n\n\n<li>Consistent customs valuation practices.<\/li>\n\n\n\n<li>Proper calculation of Input Tax Credit.<\/li>\n\n\n\n<li>Prevention of undervaluation during imports.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Common_Mistakes_While_Calculating_Import_IGST\"><\/span>Common Mistakes While Calculating Import IGST<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Businesses often make mistakes during import valuation that can lead to incorrect duty payments or compliance issues.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Some common errors include:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Calculating IGST only on the invoice value instead of the cumulative taxable value.<\/li>\n\n\n\n<li>Ignoring the applicable Basic Customs Duty (BCD) while determining the IGST base.<\/li>\n\n\n\n<li>Incorrectly assuming that Social Welfare Surcharge (SWS) can be claimed as ITC.<\/li>\n\n\n\n<li>Using an incorrect <a href=\"https:\/\/www.cashfree.com\/blog\/hsn-sac-code-gst\/\"><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-cyan-blue-color\">HSN code<\/mark><\/a>, resulting in an incorrect customs duty or IGST rate.<\/li>\n\n\n\n<li>Declaring an inaccurate assessable value due to errors in freight, insurance, or currency conversion.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">Reviewing customs documentation carefully before filing the Bill of Entry can help avoid these issues.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Input_Tax_Credit_ITC_on_IGST_Paid_at_Customs_What_You_Can_Claim\"><\/span><strong>Input Tax Credit (ITC) on IGST Paid at Customs: What You Can Claim<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">One of the advantages the GST framework brought to importers is ITC eligibility on IGST paid at customs. Registered businesses can offset this against their outward GST liability, reducing the tax paid out of pocket over the course of normal business operations.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Conditions to claim ITC on import IGST:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The importer must be registered under GST<\/li>\n\n\n\n<li>Goods must be used in the course of business, not for personal consumption<\/li>\n\n\n\n<li>The Bill of Entry must reflect the IGST payment<\/li>\n\n\n\n<li>The IGST amount must be reflected in GSTR-2B before ITC is claimed<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>What cannot be claimed as ITC:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Basic Customs Duty: this is not a GST levy and remains a cost<\/li>\n\n\n\n<li>Social Welfare Surcharge is similarly excluded from ITC<\/li>\n\n\n\n<li>IGST paid on goods used for exempt supplies or personal use<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">The ITC on IGST works as a full set-off against IGST, CGST, or SGST liabilities in that order of priority under the GST credit utilisation rules.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Import_of_Services_How_GST_Applies_Under_the_Reverse_Charge_Mechanism\"><\/span><strong>Import of Services: How GST Applies Under the Reverse Charge Mechanism<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">It is worth mentioning that the GST applicable to imported services is different because it includes both services and goods. In case a company operating in India gets services from abroad, IGST will apply, and the Reverse Charge Mechanism will be used in order to calculate the tax.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Common examples of imported services:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Software subscriptions from foreign vendors<\/li>\n\n\n\n<li>Cloud hosting or SaaS platforms billed from abroad<\/li>\n\n\n\n<li>Consulting, legal, or advisory services from overseas firms<\/li>\n\n\n\n<li>Online training or certification platforms based outside India<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Key points on RCM for imported services:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The Indian recipient pays IGST under RCM regardless of <a href=\"https:\/\/www.cashfree.com\/blog\/gst-registration-online-process-documents\/\"><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-cyan-blue-color\">GST registration<\/mark><\/a> status if the service is for business purposes<\/li>\n\n\n\n<li>No customs involvement, and the liability is self-reported and paid via <a href=\"https:\/\/www.cashfree.com\/blog\/gst-return-filing\/\"><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-cyan-blue-color\">GST return<\/mark><\/a><\/li>\n\n\n\n<li>ITC can be claimed on RCM IGST if the service qualifies for credit<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"GST_Exemptions_on_Imports_Goods_That_Are_Not_Taxed\"><\/span><strong>GST Exemptions on Imports: Goods That Are Not Taxed<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Not all imports attract IGST at full rates. Several categories carry exemptions or concessional rates:<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><tbody><tr><td><strong>Category<\/strong><\/td><td><strong>GST Treatment<\/strong><\/td><\/tr><tr><td>Life-saving drugs and medical equipment (notified list)<\/td><td>Exempt or 5%<\/td><\/tr><tr><td>Books, journals, newspapers<\/td><td>Exempt<\/td><\/tr><tr><td>Seeds for sowing<\/td><td>Exempt<\/td><\/tr><tr><td>Certain defence imports<\/td><td>Exempt under government notifications<\/td><\/tr><tr><td>Goods imported under advance authorisation<\/td><td>IGST deferred\/exempt subject to export obligation<\/td><\/tr><tr><td>EOUs (Export-Oriented Units)<\/td><td>Conditional exemptions applicable<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">Rates and exemptions are product-specific and depend on the HSN code of the imported item. Importers should verify the applicable rate via the customs tariff schedule before assuming exemption.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_Changed_After_September_2025_GST_Council_Updates_on_Imports\"><\/span><strong>What Changed After September 2025: GST Council Updates on Imports<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">The 2025 GST Council notice issued in September dealt with two issues that posed uncertainties for the importers:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>Valuation of related-party imports:<\/strong> In cases where the goods are being imported from a related party, such as a parent or subsidiary, and if the invoice price is lower than the open market price, the value could be revised by customs. The 2025 notice harmonized customs valuation and GST taxable value determination methods to avoid double scrutiny.<\/li>\n\n\n\n<li><strong>ITC conditions for goods held in bonded warehouses:<\/strong> The updated FAQ clarified that IGST paid on goods cleared from bonded warehouses qualifies for ITC at the point of customs clearance, provided the Bill of Entry is filed under the same <a href=\"https:\/\/www.cashfree.com\/blog\/what-is-goods-and-service-tax-identification-number\/\"><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-cyan-blue-color\">GSTIN<\/mark><\/a> claiming the credit. This resolved ambiguity for importers who warehouse goods before deciding the end-use destination.<\/li>\n<\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_to_Pay_IGST_on_Imports_The_Process_at_Customs\"><\/span><strong>How to Pay IGST on Imports: The Process at Customs<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">The following are the steps a registered importer follows to discharge IGST at the time of customs clearance:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li>File a Bill of Entry on the ICEGATE portal with accurate HSN codes and declared value<\/li>\n\n\n\n<li>Calculate applicable duties BCD, SWS, and IGST, based on the assessable value<\/li>\n\n\n\n<li>Pay duties online through ICEGATE, linked to the importer&#8217;s GSTIN<\/li>\n\n\n\n<li>Collect the Bill of Entry as proof of IGST payment for ITC purposes<\/li>\n\n\n\n<li>Reflect IGST in GSTR-2B auto-populated from customs data; verify before claiming ITC<\/li>\n\n\n\n<li>Claim ITC in <a href=\"https:\/\/www.cashfree.com\/blog\/types-of-gst-returns-in-india\/\"><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-cyan-blue-color\">GSTR-3B<\/mark><\/a> to offset the IGST paid against outward tax liability<\/li>\n<\/ol>\n\n\n\n<p class=\"wp-block-paragraph\">The customs and GST systems share data electronically, so IGST paid at customs feeds into the GST credit ledger without requiring manual entry.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span><strong>Conclusion<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">GST on customs duty follows a layered calculation where IGST applies over the assessable value plus BCD and surcharge, not just the invoice price. For registered importers, the IGST paid at customs converts into Input Tax Credit, recovering a significant portion of the import tax cost against outward GST liability. Import of services works separately under reverse charge.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The September 2025 updates brought clarity on valuation and bonded warehouse ITC eligibility, reducing compliance friction for businesses with complex import operations. Getting the calculation right and filing the Bill of Entry accurately are the two things that determine whether an import stays cost-efficient or creates avoidable tax exposure.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">To manage your business payments and <a href=\"https:\/\/www.cashfree.com\/blog\/what-is-an-international-payment-gateway\/\"><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-cyan-blue-color\">cross-border transactions<\/mark><\/a> with greater clarity and control, get started with Cashfree Payments.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"FAQs\"><\/span><strong>FAQs<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h4 class=\"wp-block-heading\"><strong>1. What is the difference between Basic Customs Duty and IGST on imports?<\/strong><\/h4>\n\n\n\n<p class=\"wp-block-paragraph\">Basic Customs Duty is levied under the Customs Act; IGST is a GST levy charged on the cumulative value of goods, including BCD at the customs stage.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><strong>2. Can a small business or unregistered importer claim ITC on IGST paid at customs?<\/strong>&nbsp;<\/h4>\n\n\n\n<p class=\"wp-block-paragraph\">ITC on import IGST is available only to GST-registered businesses. Unregistered importers pay IGST but cannot offset it against any tax liability.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><strong>3. Is IGST applicable on all imported goods entering India regardless of their end use?<\/strong>&nbsp;<\/h4>\n\n\n\n<p class=\"wp-block-paragraph\">IGST applies to all commercial imports. Specific exemptions exist for certain goods under government notifications based on HSN codes and import purpose.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><strong>4. How is IGST calculated when goods are imported under a concessional customs duty rate?<\/strong>&nbsp;<\/h4>\n\n\n\n<p class=\"wp-block-paragraph\">The IGST taxable base uses the actual BCD paid after applying any exemption or concession, so a lower BCD rate results in a proportionally lower IGST taxable value.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><strong>5. Does GST apply to services purchased from foreign vendors by Indian businesses?<\/strong>&nbsp;<\/h4>\n\n\n\n<p class=\"wp-block-paragraph\">Yes, imported services attract IGST under the Reverse Charge Mechanism, payable by the Indian recipient regardless of whether the foreign supplier is GST-registered.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n","protected":false},"excerpt":{"rendered":"<p>GST on imports refers to the Integrated Goods and Services Tax (IGST) charged on goods and services entering India from another country. Imported goods are treated as inter-state supplies under the IGST Act, meaning IGST is collected during customs clearance in addition to applicable customs duties. Eligible businesses can claim the IGST paid as Input<\/p>\n","protected":false},"author":142,"featured_media":37113,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"_themeisle_gutenberg_block_has_review":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_wpcom_ai_launchpad_first_post":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_post_was_ever_published":false},"categories":[9970],"tags":[],"class_list":["post-37097","post","type-post","status-publish","format-standard","has-post-thumbnail","category-gst"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v28.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>GST on Imports in India: How IGST on Customs Duty Is Calculated &amp; ITC Eligibility - Cashfree Payments Blog<\/title>\n<meta name=\"description\" content=\"Understand IGST calculation on custom duty, Input Tax Credit rules for importers, RCM on services, and key 2025 GST changes affecting Indian businesses.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.cashfree.com\/blog\/gst-on-imports-customs-duty\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"GST on Imports in India: How IGST on Customs Duty Is Calculated &amp; ITC Eligibility - Cashfree Payments Blog\" \/>\n<meta property=\"og:description\" content=\"Understand IGST calculation on custom duty, Input Tax Credit rules for importers, RCM on services, and key 2025 GST changes affecting Indian businesses.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.cashfree.com\/blog\/gst-on-imports-customs-duty\/\" \/>\n<meta property=\"og:site_name\" content=\"Cashfree Payments Blog\" \/>\n<meta property=\"article:published_time\" content=\"2026-07-02T04:18:00+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2026\/07\/GST-on-imports-guide.png?fit=1498%2C1050&ssl=1\" \/>\n\t<meta property=\"og:image:width\" content=\"1498\" \/>\n\t<meta property=\"og:image:height\" content=\"1050\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/png\" \/>\n<meta name=\"author\" content=\"Rishabh Ranjan\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Rishabh Ranjan\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"9 minutes\" \/>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"GST on Imports in India: How IGST on Customs Duty Is Calculated & ITC Eligibility - Cashfree Payments Blog","description":"Understand IGST calculation on custom duty, Input Tax Credit rules for importers, RCM on services, and key 2025 GST changes affecting Indian businesses.","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.cashfree.com\/blog\/gst-on-imports-customs-duty\/","og_locale":"en_US","og_type":"article","og_title":"GST on Imports in India: How IGST on Customs Duty Is Calculated & ITC Eligibility - Cashfree Payments Blog","og_description":"Understand IGST calculation on custom duty, Input Tax Credit rules for importers, RCM on services, and key 2025 GST changes affecting Indian businesses.","og_url":"https:\/\/www.cashfree.com\/blog\/gst-on-imports-customs-duty\/","og_site_name":"Cashfree Payments Blog","article_published_time":"2026-07-02T04:18:00+00:00","og_image":[{"width":1498,"height":1050,"url":"https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2026\/07\/GST-on-imports-guide.png?fit=1498%2C1050&ssl=1","type":"image\/png"}],"author":"Rishabh Ranjan","twitter_card":"summary_large_image","twitter_misc":{"Written by":"Rishabh Ranjan","Est. reading time":"9 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/www.cashfree.com\/blog\/gst-on-imports-customs-duty\/#article","isPartOf":{"@id":"https:\/\/blogrevamp.cashfree.com\/gst-on-imports-customs-duty\/"},"author":{"name":"Rishabh Ranjan","@id":"https:\/\/blogrevamp.cashfree.com\/#\/schema\/person\/f062683aff5362102e9c5b7541c1328c"},"headline":"GST on Imports in India: How IGST on Customs Duty Is Calculated &#038; ITC Eligibility","datePublished":"2026-07-02T04:18:00+00:00","mainEntityOfPage":{"@id":"https:\/\/blogrevamp.cashfree.com\/gst-on-imports-customs-duty\/"},"wordCount":1946,"image":{"@id":"https:\/\/www.cashfree.com\/blog\/gst-on-imports-customs-duty\/#primaryimage"},"thumbnailUrl":"https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2026\/07\/GST-on-imports-guide.png?fit=1498%2C1050&ssl=1","articleSection":["GST"],"inLanguage":"en-US"},{"@type":"WebPage","@id":"https:\/\/blogrevamp.cashfree.com\/gst-on-imports-customs-duty\/","url":"https:\/\/www.cashfree.com\/blog\/gst-on-imports-customs-duty\/","name":"GST on Imports in India: How IGST on Customs Duty Is Calculated & ITC Eligibility - Cashfree Payments Blog","isPartOf":{"@id":"https:\/\/blogrevamp.cashfree.com\/#website"},"primaryImageOfPage":{"@id":"https:\/\/www.cashfree.com\/blog\/gst-on-imports-customs-duty\/#primaryimage"},"image":{"@id":"https:\/\/www.cashfree.com\/blog\/gst-on-imports-customs-duty\/#primaryimage"},"thumbnailUrl":"https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2026\/07\/GST-on-imports-guide.png?fit=1498%2C1050&ssl=1","datePublished":"2026-07-02T04:18:00+00:00","author":{"@id":"https:\/\/blogrevamp.cashfree.com\/#\/schema\/person\/f062683aff5362102e9c5b7541c1328c"},"description":"Understand IGST calculation on custom duty, Input Tax Credit rules for importers, RCM on services, and key 2025 GST changes affecting Indian businesses.","breadcrumb":{"@id":"https:\/\/www.cashfree.com\/blog\/gst-on-imports-customs-duty\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.cashfree.com\/blog\/gst-on-imports-customs-duty\/"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.cashfree.com\/blog\/gst-on-imports-customs-duty\/#primaryimage","url":"https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2026\/07\/GST-on-imports-guide.png?fit=1498%2C1050&ssl=1","contentUrl":"https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2026\/07\/GST-on-imports-guide.png?fit=1498%2C1050&ssl=1","width":1498,"height":1050,"caption":"GST on imports guide"},{"@type":"BreadcrumbList","@id":"https:\/\/www.cashfree.com\/blog\/gst-on-imports-customs-duty\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/blogrevamp.cashfree.com\/"},{"@type":"ListItem","position":2,"name":"GST","item":"https:\/\/blogrevamp.cashfree.com\/category\/gst\/"},{"@type":"ListItem","position":3,"name":"GST on Imports in India: How IGST on Customs Duty Is Calculated &#038; ITC Eligibility"}]},{"@type":"WebSite","@id":"https:\/\/blogrevamp.cashfree.com\/#website","url":"https:\/\/blogrevamp.cashfree.com\/","name":"Cashfree Payments Blog","description":"Cashfree Payments- Payment Gateway for India","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/blogrevamp.cashfree.com\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/blogrevamp.cashfree.com\/#\/schema\/person\/f062683aff5362102e9c5b7541c1328c","name":"Rishabh Ranjan","url":"https:\/\/blogrevamp.cashfree.com\/author\/rishabh-ranjan\/"}]}},"jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p9MjXo-9El","jetpack_likes_enabled":false,"jetpack_featured_media_url":"https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2026\/07\/GST-on-imports-guide.png?fit=1498%2C1050&ssl=1","_links":{"self":[{"href":"https:\/\/blogrevamp.cashfree.com\/wp-json\/wp\/v2\/posts\/37097","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogrevamp.cashfree.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogrevamp.cashfree.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogrevamp.cashfree.com\/wp-json\/wp\/v2\/users\/142"}],"replies":[{"embeddable":true,"href":"https:\/\/blogrevamp.cashfree.com\/wp-json\/wp\/v2\/comments?post=37097"}],"version-history":[{"count":24,"href":"https:\/\/blogrevamp.cashfree.com\/wp-json\/wp\/v2\/posts\/37097\/revisions"}],"predecessor-version":[{"id":37125,"href":"https:\/\/blogrevamp.cashfree.com\/wp-json\/wp\/v2\/posts\/37097\/revisions\/37125"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/blogrevamp.cashfree.com\/wp-json\/wp\/v2\/media\/37113"}],"wp:attachment":[{"href":"https:\/\/blogrevamp.cashfree.com\/wp-json\/wp\/v2\/media?parent=37097"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogrevamp.cashfree.com\/wp-json\/wp\/v2\/categories?post=37097"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogrevamp.cashfree.com\/wp-json\/wp\/v2\/tags?post=37097"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}