ITC IMPORT AGAINST EPCG, Customs - Exim - SEZ

[ZULFIKAR VOHRA]

Dear experts,

We import machinery against EPCG licence. IGST paid throught EPCG licence.

Can we take ITC of IGST ? if yes please give us reference.

Zulfikar B. Vohra

Posts / Replies

[KASTURI SETHI]

Yes. You can take ITC of IGST paid. Relevant extract of FAQ is given below :-

FAQs dated 7.7.17 released by DGFT

Q12. Under GST regime, can we get duty free benefit (all duties exempted) if we import using Advance authorization or EPCG?

Reply. Under GST regime, both the Advance Authorization and EPCG holders would continue to get the exemption from payment of the Basic Customs Duty, Safeguard Duty, Transitional Product Specific Safeguard Duty and Antidumping Duty. And for items specified in Fourth Schedule to Central Excise Act, 1944 (specified petroleum products, tobacco etc.) exemption from Additional C Duty leviable under Sections 3(1), 3(3) and 3(5) of the Customs Tariff Act, 1975 will also be available.

However there is one major change. Now an Advance Authorisation holder will have to pay IGST at the time of imports. He can take Input Tax Credit (ITC), and after export, claim refund of any unutilized input tax credit at the end of tax period.

The EPCG holder also will have to pay IGST at the time of imports and take Input Tax Credit (ITC) on the duty paid. He cannot claim refund of any unutilized input tax credit after the exports.

Q16. Will IGST be refunded for Capital Goods imported under EPCG scheme?

Reply. The EPCG holder also will have to pay IGST at the time of imports and take Input Tax Credit (ITC) on the duty paid. He cannot claim refund of any unutilized input tax credit after the exports.

[KASTURI SETHI]

Extract of Board's circular dated 1.7.17. This is a procedure for availing ITC of IGST and Compensation Cess paid.

XI. Imports and Input Tax Credit (ITC) :

In GST regime, input tax credit of the integrated tax (IGST) and GST Compensation Cess shall be available to the importer and later to the recipients in the supply chain, however the credit of basic customs duty (BCD) would not be available. In order to avail ITC of IGST and GST Compensation Cess, an importer has to mandatorily declare GST Registration number (GSTIN) in the Bill of Entry. Provisional IDs issued by GSTN can be declared during the transition period. However, importers are advised to complete their registration process for GSTIN as ITC of IGST would be available based on GSTIN declared in the Bill of Entry. Input tax credit shall be availed by a registered person only if all the applicable particulars as prescribed in the Invoice Rules are contained in the said document, and the relevant information, as contained in the said document, is furnished in FORM GSTR-2 by such person.

Customs EDI system would be interconnected with GSTN for validation of ITC. Further, Bill of Entry data in non-EDI locations would be digitized and used for validation of input tax credit provided by GSTN.

[ZULFIKAR VOHRA]

Dear sir,

We are not paying IGST and customs duty at time of import (duty debit from EPCG licence).

can we get ITC of IGST?

please suggest. kindly share with us reference.

Zulfikar B. Vohra

[KASTURI SETHI]

Keeping in view of your latest query, ITC of IGST is NOT allowed. Relevant extract are given below:-

Para No 5.1(e) of FTP 2015-20

(e) In case Integrated Tax and Compensation Cess are paid in cash on imports under EPCG, incidence of the said Integrated Tax and Compensation Cess would not be taken for computation of net duty saved provided Input Tax Credit is not availed.

Amendments to Foreign Trade Policy 2015-2020 - Extension of Integrated Goods and Service Tax (IGST) and Compensation Cess exemption under Advance Authorisation, EPCG and EOU scheme upto 31.03.2020. - 57/2015-20 - Foreign Trade Policy

[CSSANJAY MALHOTRA]

No u can’t avail ITC as you have not paid the IGST amount in cash during Import clearance.

[YAGAY andSUN]

In our view also you cannot claim ITC.