IGST on Customer Consgined item for production purpose, Goods and Services Tax - GST

[MistralSolutionsPrivateLimited]

Dear All,

Overseas customer wants to send few specific components (FOC) to our production unit and wants us to integrate the components into the final product. The final product will be exported to him .

In this scenario, we will have to pay IGST at the time of import. This is clear.

The question is whether the importer can avail the ITC.

As per section, serial # 2D of section 16 of GST act, ITC is not eligible if the payment is not made to the supplier. Since we are not going to make the payment to the supplier as the components are supplied free of cost. Please clarify in this scenario, can we avail the ITC or not.

regards

Saravanan.

Posts / Replies

[KASTURI SETHI]

For availing and utilisation of Credit, there are two basic conditions. Duty must be paid and must be utilised in the business or in furtherance of business while paying tax. Both the conditions are to fulfilled. You qualify only second condition. Hence ITC is not allowed.

[MistralSolutionsPrivateLimited]

Dear Kasturi Sir,

We qualify 1st condition also as the consignment is cleared on payment of Duty. My question is can we avail the input on the duty amount (IGST) though the shipment value is not payable to the supplier as the shipment is on FOC basis.

As per section, serial # 2D of section 16 of GST act, ITC is not eligible if the payment is not made to the supplier. Since we are not going to make the payment to the supplier as the components are supplied free of cost. Please clarify in this scenario, can we avail the ITC or not.

[KASTURI SETHI]

You will do assembling which is manfacturing process. How will you arrive at correct transactional value for the purpose of payment of GST ? May be for the purpose of export. Full value of goods including IGST to be paid, if you want ITC. This is my view. I would like oher experts to intervene.

[Susheel Gupta]

Dear Sir

IGST on import is paid on reverse charge basis. condition of payment to supplier is not their when tax is to be paid on RCM basis. You can take the ITC.

Regards

CA Susheel Gupta

9811004443