GST on Imports in India: A Complete and Updated Guide (2024-25)

TL;DR GST on imports in India means IGST is levied on all imported goods and services — calculated on CIF value plus customs duties — with the IGST fully recoverable as ITC for registered businesses, making it a cash-flow item rather than a final cost. Key 2024-25 updates include Budget 2024 reducing gold customs duty from 15% to 6%, October 2023 extending 18% IGST to all OIDAR digital services including personal-use Netflix and AWS subscriptions, and March 2025 BCD rationalization reducing slabs from 8 to 5. SEZ imports enjoy complete zero-rating while EOU imports get BCD exemption only — and e-Way Bills are mandatory for imported goods transported after customs clearance when consignment value exceeds ₹50,000.

All goods and services imported into India are subject to IGST (Integrated GST) under Section 7(2) of the IGST Act 2017, treating imports as inter-state supply — calculated on the cumulative base of CIF value plus Basic Customs Duty plus Social Welfare Surcharge, with the IGST rate matching the domestic GST rate for that product. IGST paid at customs clearance is fully claimable as Input Tax Credit in GSTR-3B for registered businesses, while BCD and SWS cannot be claimed as ITC — and for imported services including OIDAR platforms like Netflix and AWS, 18% IGST applies under Reverse Charge Mechanism for B2B users, who can subsequently claim the ITC back.

If you are a business owner, an importer, or simply someone who wants to understand how taxes work on goods and services coming into India, this guide is for you. GST on imports in India can seem complicated at first, but once you understand the basics, it becomes much easier to manage.

This guide covers everything you need to know about GST on imports in India, including how IGST is calculated, the impact of Budget 2024 changes, how digital services are taxed, e-way bill rules for imported goods, and common questions people ask. Whether you are importing raw materials for your factory or subscribing to an overseas software platform, this guide will help you understand your tax obligations clearly.

What Is GST on Imports in India?

When goods or services come into India from another country, they are subject to Goods and Services Tax (GST). Under India’s GST framework, all imports are treated as inter-state supplies. This means Integrated GST (IGST) is applied to all imports, just as it is applied when goods move from one state to another within India.

Before GST was introduced in July 2017, importers had to deal with several different taxes such as Customs Duty, Countervailing Duty (CVD), and Special Additional Duty (SAD). Under the GST regime, these have been simplified. Today, the main taxes on imported goods are:

•       Basic Customs Duty (BCD) — levied under the Customs Act, 1962
•       Social Welfare Surcharge (SWS) — usually 10% of BCD
•       Integrated GST (IGST) — levied under the IGST Act, 2017
•       Agriculture Infrastructure and Development Cess (AIDC) — applicable on certain goods
•       Compensation Cess — applicable on luxury or sin goods

It is important to note that IGST is not an additional burden on businesses because it can be claimed back as Input Tax Credit (ITC). This is one of the biggest advantages of the current system.

 Why Are Imports Treated as Inter-State Supply?

Section 7(2) of the IGST Act, 2017 specifically states that the import of goods into India is to be treated as inter-state supply. This makes IGST applicable on all imports. Since GST is a destination-based tax, IGST is charged in the state where the imported goods are ultimately consumed or used.

For example, if a company in Tamil Nadu imports machinery from Germany, the IGST will be collected and eventually credited to Tamil Nadu (the destination state). This system ensures that the tax revenue flows to the state where actual consumption takes place.

To understand how IGST differs from CGST and SGST and how Place of Supply determines which tax applies to your transactions, read our complete guide on CGST vs SGST vs IGST.

 Customs Duty on Imports: The Basics

Customs duty is the first layer of tax that applies when goods enter India. It is collected by the Central Government under the Customs Act, 1962. The rate of customs duty depends on the HS Code (Harmonized System Code) of the product and various notifications issued by the Central Board of Indirect Taxes and Customs (CBIC).

Assessable Value: How Is It Calculated?

The assessable value of imported goods is calculated using the CIF method, which stands for Cost + Insurance + Freight. This means the starting point for all duty calculations is the total value of goods at the port of origin, including shipping charges and insurance costs.

Here is how the taxes layer up:

• Step 1: Start with CIF value (Cost + Insurance + Freight)
• Step 2: Add Basic Customs Duty (BCD)
• Step 3: Add Social Welfare Surcharge (usually 10% of BCD)
• Step 4: Calculate IGST on the total of all the above

This layered structure means IGST is calculated on a broader base than just the original invoice value. Importers should plan for this when calculating their landed costs.

Custom Duty Reduction on Gold Imports — Budget 2024 Update

One of the most significant changes in the Union Budget 2024-25, presented by Finance Minister Nirmala Sitharaman on 23 July 2024, was the sharp reduction in customs duty on gold and silver. This was a landmark move that directly impacted the jewellery industry, individual buyers, and bullion importers across India.

What Changed for Gold Imports?

The total customs duty on gold imports was reduced from 15% to 6%. Here is how the revised structure looks:

Component	Before Budget 2024	After Budget 2024
Basic Customs Duty (BCD)	10%	5%
Agriculture Infrastructure and Development Cess (AIDC)	5%	1%
Total Customs Duty	15%	6%

 

The same reduction also applies to silver imports (now 6%) and platinum imports (now 6.4%, reduced from 15.4%). The duty cut is effective from 24 July 2024.

What Does This Mean for Gold Importers?

This 9% reduction in customs duty on gold is the sharpest cut on record and brings the duty to its lowest level since June 2013. Here is how it affects different stakeholders:

•       Jewellery Manufacturers: Lower input costs, improved competitiveness in international markets
•       Retail Buyers: Reduced gold prices by approximately 9%, making jewellery and gold bars more affordable
•       Small and Medium Enterprises (SMEs) in Jewellery: Better access to working capital with reduced import costs
•       Anti-Smuggling Impact: With total tax (including GST of 3%) now at 9%, the earlier smuggling profit margin of 6-7% has been virtually eliminated

Note: IGST on gold itself continues to be 3% as per the GST rate applicable to gold. The customs duty reduction applies to BCD and AIDC components only.

 How to Calculate IGST on Imports — Step-by-Step with Example

Many importers find the IGST calculation confusing because it is applied on the cumulative value, not just the original product value. Here is a simple and clear explanation.

The IGST Formula

IGST = (Assessable Value + BCD + Other Duties) × IGST Rate

In other words, IGST is calculated on the total of:

•       CIF Value (Assessable Value)
•       Basic Customs Duty (BCD)
•       Social Welfare Surcharge (SWS) — 10% of BCD
•       Any applicable AIDC or other cesses

This is sometimes called the “cascading base” because each tax builds on top of the previous one.

Step-by-Step Example: Importing Industrial Machinery

Let us say you are importing industrial machinery worth Rs. 5,00,000 (CIF value). Here is how the taxes are calculated:

Component	Amount (Rs.)
CIF Value (Assessable Value)	5,00,000
Add: BCD @ 10%	50,000
Add: SWS @ 10% of BCD	5,000
Total Customs Duty Paid Value	5,55,000
IGST @ 18% on Rs. 5,55,000	99,900
Total Tax Outflow	1,54,900

 In this example, the importer pays Rs. 1,54,900 in total taxes. However, the IGST of Rs. 99,900 can be claimed as Input Tax Credit (ITC) in the GSTR-3B return, provided the machinery is used for business purposes. The BCD of Rs. 50,000 and SWS of Rs. 5,000 cannot be claimed as ITC and become part of the cost of the asset.

ITC on IGST Paid at Customs

One of the most important benefits for registered businesses importing goods is that the IGST paid at the time of customs clearance is fully available as Input Tax Credit. Here are the key points:

•       IGST paid on imports is reflected in Form GSTR-2B based on data from the customs portal (ICEGATE)
•       The ITC can be claimed in your GSTR-3B return for that month
•       ITC is available only if the goods are used for business purposes and not for personal use
•       BCD and SWS are not eligible for ITC — they become part of the cost

This ITC mechanism makes IGST on imports essentially a cash-flow item rather than a final cost for businesses registered under GST.

 GST on Import of Services

Not just physical goods — even services received from outside India are subject to GST. When a service provider located outside India provides a service to a recipient in India, it is called an import of services.

What Counts as Import of Services?

Under Section 2(11) of the IGST Act, 2017, import of services means the supply of any service where:

•       The supplier is located outside India
•       The recipient is located in India
•       The place of supply is in India

Examples include: IT consulting services from a US company, management advisory from a UK firm, legal services from an overseas law firm, or any professional service provided remotely by a foreign supplier.

Reverse Charge Mechanism (RCM) for Imported Services

For most imported services, the recipient in India is responsible for paying GST under the Reverse Charge Mechanism (RCM). This means the Indian business must self-assess and pay IGST, and then can claim it back as ITC. Reverse charge mechanism applies to several other categories of services beyond imports — read our detailed guide on GST for professional services in India to understand the full RCM applicability list and compliance requirements.

•       The Indian importer pays IGST under RCM in cash (ITC cannot be used at the time of payment)
•       After payment, the IGST paid under RCM becomes available as ITC
•       Services imported for personal use (not for business) are not eligible for ITC

 OIDAR Services — GST on Digital Service Imports (Netflix, Zoom, AWS)

With the rise of cloud computing, streaming platforms, and software subscriptions, digital service imports have become a significant part of daily business and personal life in India. A special category of services called OIDAR — Online Information and Database Access or Retrieval services — covers most of these digital services.

What Are OIDAR Services?

OIDAR services are defined under Section 2(17) of the IGST Act, 2017. These are digital services delivered over the internet or an electronic network where the delivery is mediated by information technology and the supply would be impossible without such technology.

Common examples of OIDAR services include:

•       Video and audio streaming platforms — Netflix, Spotify, Disney+ Hotstar, Apple Music
•       Video conferencing and collaboration tools — Zoom, Microsoft Teams, Google Meet
•       Cloud computing and storage services — Amazon Web Services (AWS), Google Cloud, Microsoft Azure
•       Software as a Service (SaaS) platforms — Adobe Creative Cloud, Salesforce, Canva
•       Online education platforms — Coursera, Udemy, LinkedIn Learning
•       Digital advertising platforms — Google Ads, Meta Ads

GST Rate for OIDAR Services

OIDAR services attract IGST at 18% in most cases. The only exception is e-books, which attract a lower rate of 5%.

Starting from October 1, 2023, the Government of India removed the earlier exemption that personal-use imports of OIDAR services enjoyed. This means that from October 2023 onwards, 18% IGST applies to OIDAR services regardless of whether the import is for business or personal use.

Who Pays GST on OIDAR Services?

The tax responsibility depends on the type of recipient:

Provider Location	Recipient in India	Who Pays GST	GST Rate
India	GST-registered business	Service Provider (Forward Charge)	18% IGST
Outside India	GST-registered business	Indian Recipient (Reverse Charge)	18% IGST
Outside India	Unregistered individual (B2C)	Foreign Provider (registers in India)	18% IGST

 Practical Impact: What Does This Mean for Indian Users?

For individual subscribers (B2C users): Foreign OIDAR providers like Netflix, Spotify, Zoom, and AWS must register under GST in India using Form REG-10 and pay 18% IGST directly to the Indian government. They file a monthly return called GSTR-5A.

For GST-registered businesses (B2B users): If you are a company using AWS or any other overseas digital service for business purposes, you must pay GST on a reverse charge basis. The good news is that this IGST can then be claimed as ITC in your GSTR-3B return.

For example, if your company uses AWS for cloud hosting and pays USD 1,000 per month, you need to:

1.   Calculate the IGST at 18% on the equivalent INR amount
2.   Pay this under reverse charge mechanism in cash
3.   Claim it back as ITC in your GSTR-3B

Note: If your GSTIN is registered with AWS, they will not charge you IGST separately as you handle it through RCM.

 E-Way Bill for Imported Goods — When Is It Required?

An e-Way Bill (Electronic Way Bill) is a digital document that must be generated before transporting goods in India. For imported goods, the e-Way Bill requirement applies after the goods are cleared from customs and are being transported to the importer’s warehouse or place of business.

Understanding the Import Journey and e-Way Bill Requirements

The import journey has several stages, and the e-Way Bill requirement differs at each stage:

Stage of Import	Movement Type	e-Way Bill Required?
Port / Airport to ICD or CFS	Under customs supervision	No — exempt
ICD / CFS to Importer’s Premises	After Bill of Entry filed	Yes — if value exceeds Rs. 50,000
ICD to Bonded Warehouse	Under customs bond	No — exempt
Bonded Warehouse to Importer’s Premises	After clearance from bond	Yes — if value exceeds Rs. 50,000

 The Key Rule: Rs. 50,000 Threshold

An e-Way Bill is mandatory when imported goods are transported after customs clearance and the value of the consignment exceeds Rs. 50,000. Since imports are treated as inter-state supply, the e-Way Bill rules for inter-state movement apply. This means the Rs. 50,000 threshold applies uniformly across India for imported goods being transported after customs clearance.

Who Generates the e-Way Bill for Imports?

For imported goods, the importer (consignee) or the transporter is responsible for generating the e-Way Bill. The e-Way Bill must be generated on the government portal at ewaybillgst.gov.in before the goods begin their journey from the customs clearance point to the destination.

Key details needed to generate the e-Way Bill for imports:

•       Importer’s GSTIN
•       Bill of Entry number and date
•       Item description, HSN code, quantity, and value
•       Transporter details and vehicle number

The validity of the e-Way Bill depends on the distance. For regular cargo, it is valid for 1 day for every 200 km or part thereof.

Exemptions from e-Way Bill for Imported Goods

No e-Way Bill is needed in these specific situations:

•       Movement of goods from port / airport to ICD or Container Freight Station (CFS) — this is covered by customs documents
•       Movement of goods under customs bond between customs stations
•       Transport by non-motorized vehicles
•       High sea sales (goods are outside India’s territory, so Indian GST does not yet apply)

 Types of Imports and GST Treatment

GST on Import of Goods

When physical goods are imported into India, customs collects both the customs duty and IGST at the time of filing the Bill of Entry. The process is:

4.   Importer files the Bill of Entry on the ICEGATE portal
5.   GSTIN is quoted in the Bill of Entry
6.   Customs assesses the value and applicable duties
7.   Importer pays BCD, SWS, and IGST in cash
8.   IGST credit appears in GSTR-2B from ICEGATE data
9.   Importer claims ITC in GSTR-3B

It is important to note that IGST on imports must be paid in cash at the time of customs clearance. ITC cannot be used at this stage for payment.

Special Categories of Imports

Certain types of imports receive special treatment under GST:

•       High-Seas Sale: When goods are sold while they are still at sea (before customs entry), IGST is charged only once at the time of the first customs clearance. All value additions from successive high-seas transactions are included in one bill of entry.
•       Bonded Warehouse Imports: Goods can be stored in a customs-bonded warehouse. Duties (including IGST) are paid only when the goods are cleared for home consumption, not at the time of arrival.

 SEZ Imports and EOU Imports — Special Rules

Special Economic Zones (SEZ) Imports

Special Economic Zones (SEZs) in India are designated areas treated as foreign territory for customs and GST purposes. Here is how imports into SEZs work:

•       Goods imported directly into SEZ units are zero-rated. This means no customs duty and no IGST applies on imports for authorized operations within the SEZ.
•       Supplies made from the Domestic Tariff Area (DTA — the rest of India) to SEZ units are also treated as zero-rated exports.
•       SEZ units enjoy an IGST exemption on imports of goods and services used for authorized operations, including capital goods, raw materials, consumables, and input services.

This zero-rating makes SEZs highly attractive for export-oriented businesses because they can procure inputs tax-free.

Export Oriented Units (EOU) Imports

Export Oriented Units (EOUs) are businesses that export all or most of their production. Under the EOU scheme, imports receive specific benefits:

•       Duty-free imports: EOUs can import raw materials and capital goods without paying Basic Customs Duty (BCD).
•       However, IGST is payable on imports into EOUs unless a specific exemption is available.
•       EOUs can claim refund of GST paid on domestic inputs and on imports.
•       Minimum investment requirement: Rs. 1 crore in plant and machinery before commercial production begins.

The key difference between SEZ and EOU treatment is that SEZ imports are completely zero-rated, while EOU imports get relief primarily on BCD. EOUs pay GST first and then claim refunds, whereas SEZs are outright zero-rated.

 Key Documents Required for Importing Goods Under GST

To ensure smooth customs clearance and correct GST compliance, importers must have the following documents in order:

•       Import Export Code (IEC) certificate — mandatory for all importers
•       Bill of Entry — filed on the ICEGATE portal, records the value, HSN code, BCD, and IGST payable
•       Commercial Invoice and Packing List from the foreign supplier
•       Bill of Lading / Airway Bill — transport document
•       Insurance Certificate
•       GSTIN — must be quoted on the Bill of Entry for ITC eligibility
•       Product-specific certificates — for regulated goods like medical devices, electronics (BIS certification), etc.
•       Certificate of Origin — for claiming concessional duty under FTAs

 Recent Update: BCD Rationalization (Effective March 2025)

The Government of India rationalized the Basic Customs Duty rate structure effective from March 2025. The number of BCD slabs was reduced from 8 to 5 rates (including zero rate). Here is what changed:

•       Earlier rates of 25%, 30%, and 40% BCD have been aligned to 20%
•       Earlier rates of 150%, 120%, and 100% BCD have been reduced to 70%

This rationalization is aimed at simplifying the customs duty structure and reducing uncertainty for importers. The standard BCD slabs now are: 0%, 5%, 10%, 15%, and 20% for most goods, with a special slab of 70% for certain high-duty items.

Importers should check the ICEGATE portal and the Customs Tariff Schedule to confirm the applicable BCD for their specific HSN codes after this rationalization.

 Input Tax Credit (ITC) on Imports — What You Can and Cannot Claim

Understanding ITC on imports is critical for businesses to manage their cash flow effectively.

What Can Be Claimed as ITC?

•       IGST paid at the time of customs clearance on goods — fully claimable as ITC
•       IGST paid under Reverse Charge Mechanism on imported services — claimable after actual payment
•       Compensation Cess paid on imports (where applicable) — claimable as ITC

What Cannot Be Claimed as ITC?

•       Basic Customs Duty (BCD) — not claimable, becomes part of the cost of goods
•       Social Welfare Surcharge (SWS) — not claimable
•       AIDC (Agriculture Infrastructure and Development Cess) — not claimable
•       IGST on goods or services used for personal use or for activities outside the scope of GST

How to Claim ITC on Imports in GSTR-3B?

10. Your Bill of Entry data from ICEGATE flows into your GSTR-2B automatically
11. Check Table 3(b) of GSTR-3B — this is where you report ITC on imports of goods
12. For services imported under RCM, report in Table 4 of GSTR-3B after payment
13. Ensure your GSTIN is correctly quoted on all Bills of Entry

How PKC India Can Help You Manage GST on Imports

Managing GST compliance on imports is not always straightforward. From correctly computing IGST to claiming ITC, handling OIDAR services under reverse charge, generating e-Way Bills on time, and staying updated with changes like the Budget 2024 gold duty cut and the March 2025 BCD rationalization — there is a lot to keep track of.

At PKC India, our team of experienced Chartered Accountants provides end-to-end support for businesses involved in import and export. Our services include:

•       IGST computation and customs duty assessment
•       ITC reconciliation and GSTR-2B matching for import credits
•       GST registration and compliance for OIDAR and reverse charge services
•       Advisory on SEZ and EOU benefits and eligibility
•       e-Way Bill management for imported goods
•       Representation before customs and GST authorities

Whether you are a first-time importer or an established business looking to optimize your tax position, PKC India is your trusted partner for GST and customs advisory. Reach us at www.pkcindia.com to get expert guidance tailored to your business needs.

 Disclaimer: This blog has been prepared for general informational purposes only. Tax laws and rates are subject to change. Readers are advised to consult a qualified Chartered Accountant or tax professional for advice specific to their situation. Information in this article reflects the position as updated to May 2026.

FAQs:

1. Is GST applicable on all goods imported into India?

Yes. All goods imported into India are subject to IGST in addition to any applicable customs duties. There is no general exemption from IGST for imports. However, certain goods that are completely exempt from GST even when sold domestically (such as specified agricultural produce) may also be exempt from IGST when imported.

2. Can I claim ITC on IGST paid when importing goods?

Yes. If you are a GST-registered business and you are importing goods for use in your business, the IGST paid at customs clearance is available as Input Tax Credit. You can claim it in your GSTR-3B return once it appears in your GSTR-2B. However, BCD and SWS paid at customs are not available as ITC.

3. How is IGST calculated on imports? What is the formula?

The formula is: IGST = (Assessable Value + BCD + Social Welfare Surcharge + Other applicable duties) × IGST Rate. The IGST rate is the same as the GST rate applicable to that product when sold domestically in India. For example, if a product attracts 18% GST when sold in India, it also attracts 18% IGST when imported.

4. What is the customs duty on gold after Budget 2024?

After Budget 2024 (effective from 24 July 2024), the total customs duty on gold has been reduced from 15% to 6%. This consists of 5% Basic Customs Duty (BCD) and 1% Agriculture Infrastructure and Development Cess (AIDC). GST on gold jewellery and gold items remains at 3% separately.

5. What is OIDAR and how does it affect my Netflix or AWS subscription?

OIDAR stands for Online Information and Database Access or Retrieval services. It covers digital services like Netflix, Spotify, Zoom, AWS, and similar platforms. From October 1, 2023, 18% IGST applies on such services regardless of whether the use is personal or for business. For B2C users, the foreign provider (like Netflix) collects and pays the GST. For B2B users (registered businesses), the Indian company pays under the Reverse Charge Mechanism and can claim ITC.

6. When is an e-Way Bill required for imported goods?

An e-Way Bill is required for imported goods when they are transported after customs clearance and the value of the consignment exceeds Rs. 50,000. Specifically, it is needed when goods move from the Inland Container Depot (ICD) or Container Freight Station (CFS) to the importer’s place of business. Movement of goods under customs supervision (from port to ICD) is exempt from the e-Way Bill requirement.

7. Are SEZ imports exempt from IGST?

Yes. SEZ (Special Economic Zone) units are exempt from payment of IGST on imports of goods and services used for their authorised operations. Supplies made from the Domestic Tariff Area to SEZ units are treated as zero-rated exports. For EOU (Export Oriented Units), the benefit is more limited — they get BCD exemption on imports but need to pay IGST in most cases (and can claim a refund later).