Imports: IGST at the Border, Not Inside GST Returns
Import of goods is treated as an inter-State supply, attracting IGST under Section 5(1) of the IGST Act, 2017, read with Section 3(7) of the Customs Tariff Act, 1975. IGST on imported goods is assessed and collected by Customs at the time of clearance, along with Basic Customs Duty (BCD) — it is not self-assessed and paid through a regular GSTR-3B like a domestic supply. The importer takes credit of this IGST based on the Bill of Entry, which functions as the tax invoice for import ITC purposes. Import of services, by contrast, is typically taxed under reverse charge by the Indian recipient rather than collected by Customs.
Exports: Zero-Rated Supply — Two Routes
| Route | How it works | What you recover |
|---|---|---|
| Export under LUT (no IGST paid) | File a Letter of Undertaking; export without charging or paying IGST | Refund of accumulated, unutilised input tax credit attributable to the export |
| Export with IGST payment | Pay IGST on the export supply as if it were taxable, then claim it back | Refund of the IGST actually paid on the export |
Both routes are genuinely "zero-rated" under Section 16 of the IGST Act — the exporter does not bear GST as a final cost either way. The LUT route avoids a cash outflow-and-refund cycle and is the more commonly used option for regular exporters; the pay-and-refund route is sometimes used where LUT eligibility conditions are not met or a specific commercial reason favours it.
Place of Supply: Why It Decides Whether GST Applies at All
Before applying any rate or exemption, confirm the place of supply. A transaction that looks like an export or import on paper only qualifies for zero-rating or import-IGST treatment if the place-of-supply rules under the IGST Act actually classify it as a cross-border supply — an intermediary arrangement, a supply completed entirely within India despite an eventual export, or a service performed for a foreign recipient but consumed in India can each fall outside the export/zero-rating treatment even though the invoice says "export."
Eight-stage method
- Define the supply and transaction date.
- Collect technical, commercial and contractual evidence.
- Determine goods/services and composite/mixed character.
- Classify under HSN/SAC using statutory interpretation rules.
- Match the current rate or exemption entry.
- Apply RCM, cess, place-of-supply and State counterparts.
- Calculate tax and test invoice/return reporting.
- Approve, archive and monitor later amendments.
Minimum review note
The conclusion should state the HSN/SAC, exact notification serial, rate components, conditions, effective date, contrary entries considered and supporting documents.
For the connected rule or filing step, see Import Duty, IGST and Landed Cost Calculator.
Primary sources
- IGST Act, 2017 — Section 5(1) (levy of IGST on imports) and Section 16 (zero-rated supply)
- Customs Tariff Act, 1975 — Section 3 (levy of additional/integrated duty on imports)
- CBIC — Central Board of Indirect Taxes and Customs
- GST Council — Central GST Act, Rules and notifications
Finin2min Q&A
Can an HSN chapter determine the GST rate?
No. The exact heading, description, exclusions, conditions, notification entry and effective date must be matched.
Can a GST Council recommendation be applied directly?
No. Identify the implementing notification and commencement date.
Does a portal rate search replace classification?
No. It is an aid; the tariff, notification and evidence control the legal conclusion.
When should a rate page be indexed?
Only after exact current entry text, amendments, conditions, examples and reviewer approval are complete.