Impact of GST on import and export

Tax Reform in India: Introduction of Goods and Service Tax

On July 1, 2017, the GST (Goods and Services Tax), a new uniform tax on goods and services in India, came into force. Probably the largest tax reform in the country since independence in 1947, the tax system is to be considerably simplified and standardized.

The following overview shows how complex indirect taxes were previously regulated in India. It lists the taxes that the GST will replace:

Taxes at the federal level
State-level taxes
Central Excise Duty (manufacture of goods)Value Added Tax VAT / Sales Tax (delivery of goods)
Service Tax (provision of services)Entry Taxes (import of goods)
Additional Customs Duty CVD (imports)Octroi / Local Body Tax (import of goods)
Special Additional Customs Duty SAD (imports)Luxury Tax (e.g. hotel services)
Swachh Bharat Cess (Service Tax Surcharge)Entertainment Tax (amusements)
Additional Excise Duty (certain goods)Purchase Tax (certain goods)

Previously, both the individual states and the federal government were allowed to levy indirect taxes on various transactions. The new GST does not deviate from this basic system and consists of the following three components:

Central GST ("CGST"): Central government tax

State GST ("SGST"): State tax

Integrated GST ("IGST"): overarching tax

Which of these three taxes apply is decided according to the place of performance:

Place of performancetax rate
State performanceCGST
SGST
Service between 2 statesIGST
Import of goodsIGST (previously customs)
Import of servicesIGST

The place of performance for deliveries of goods is the place where the movement of goods ends. For services, it is the place of the recipient of the service.