India GST and Customs Duty Changes: Key Updates and Impacts

India GST & Customs Duty, GST on Imports in India

The introduction of the Goods and Services Tax (GST) in India has reshaped the taxation landscape for imports. While GST has streamlined many indirect taxes, Basic Customs Duty (BCD) remains outside its scope and continues to be levied as per existing customs laws. This section explores the impact of GST on imports, including changes to duties and taxes.

India GST and Customs Duty

Customs Duty Changes After GST

Basic Customs Duty (BCD): BCD is not subsumed under GST and continues to be charged as per the Customs Act. For instance, a 10% BCD was introduced on mobile phones and specific electronic components, such as chargers, batteries, wired headphones, microphones, keypads, USB cables, and receivers, aligning with GST implementation.

Education Cess, Anti-dumping Duty, and Safeguard Duty: These duties remain unaffected by GST and are levied as per existing regulations to protect domestic industries and ensure fair trade practices.

Countervailing Duty (CVD) and Special Additional Duty (SAD): Previously levied on imports, CVD and SAD have been replaced by the Integrated Goods and Services Tax (IGST) under the GST regime, except in specific cases. IGST is applied to imports to ensure uniformity in taxation.

GST and Customs Duty on Gold

Before GST, the total tax on gold jewellery was approximately 12.2%, comprising 10% customs duty, 1% excise duty, and 1.2% VAT (varying by state, e.g., 1% in Rajasthan to 5% in Kerala). With GST, the excise duty and VAT components have been replaced by a 3% GST rate on gold, announced on June 3, resulting in a modest tax increase. However, the 10% BCD on gold remains, levied alongside GST.

Note: State-specific VAT rates and additional local taxes could increase the overall tax burden on gold jewellery in certain regions.

Impact of GST on Imports

GST has minimal impact on non-GST duties like BCD, Education Cess, Anti-dumping Duty, and Safeguard Duty, which continue to be levied as before. However, the replacement of CVD and SAD with IGST simplifies the tax structure for imports, ensuring a unified tax system. This change aligns with GST’s goal of creating a seamless tax framework across India.