The much-awaited GST law will be effective from the next year to bring nationwide uniformity of taxation laws. This will make the taxation process simplified by eliminating multiple taxation filing both at central and state level. The nex tax regime is more easy and simple and creating the swift business environment. It would be applicable on all the verticals of the domestic market of India this includes import also. Import of goods and service would be treated as interstate supply and IGST (Integrated Goods & Service Tax) would apply on the import of goods and services in the country.
The destination principle and tax revenue will get accrued, where the imported goods get consumed and an SGST would apply. A full and complete set-off will be made available on the paid GST on imports. As per the guidelines ready for CGST (Central Goods and Service Tax), act whatever import will get shipped shall attract CGST and certain percentage of IGST (Interstate Goods and Service Tax). The CGST shall be consumed or transferred to the central government. The SGST levied against imports shall be credited to the state government.
Basic customs duty remains the same as usual. Once after deriving assessable value of imported goods, basic customs duty is finalized. So, even after introduction of Goods and Service Tax (GST), there is no changes in basic customs duty structure fixing by central government time to time. Additional customs duty will be merged with GST at the time of import. In other words, the additional custom duty in lieu of CVD /Excise and the Special Additional Duty (SAD) in lieu of sales tax/VAT will be subsumed in GST.
Under current Tax regime imports undergo following Tax Structure:
Value of Goods – 1oo
Cutom Duty – 10
Other Duties- 19.5 (CVD+ SAD+ Cess + Loading Charges)
————-Total Cost of Goods- 129.5
Refund – 5 (SAD)
Net Cost of Goods – 124.5
Selling Price – 150
————–Profit to Dealer – 25.5
—————Under GST Tax structure shall be:
Value of Goods – 1oo
Cutom Duty – 10
IGST @ 20% – 22
————-Total Cost of Goods- 132
Refund – 22
Net Cost of Goods – 110
Selling Price – 150
————–Profit to Dealer – 40
However, if we presume an ideal scenario, dealers may pass on the additional profits earned to final consumer & could make prices cheaper to keep their margins intact. Which is exactly the reason why Govt. is hoping that GST would bring down prices & inflation & the real reasoning behind implementation of GST.