Indirect Tax Advisory — GST, Customs & Export Incentives

Post-GST (1 July 2017), the primary indirect taxes are: (1) GST — CGST, SGST/UTGST, IGST on supply of goods and services; (2) Customs Duty — on import/export of goods under the Customs Act 1962; (3) Excise Duty — on petroleum products and alcohol (not subsumed into GST); (4) Stamp Duty — on instruments, levied by states. Other sector-specific levies: entertainment tax on some states, electricity duty, and professional tax. Pre-GST taxes (excise, service tax, VAT) continue to be litigated for periods before July 2017.

Post-GST, a business with only domestic operations effectively has one indirect tax authority — GSTN. For businesses involved in imports/exports: GSTN (GST), ICEGATE (Customs), and DGFT portal (FTP licences). Common compliance calendar: GST — monthly/quarterly returns; Customs — shipping bill, bill of entry filed transaction-by-transaction; DGFT — AA/EPCG licence usage reporting annually. A single compliance calendar across all three authorities reduces the risk of missed filings.

On import: BCD (Basic Customs Duty) at the HSN-notified rate (Customs Tariff Act 1975) + Social Welfare Surcharge (10% of BCD) + IGST at the GST rate on the CIF value + BCD + SWS. The IGST on imports is eligible as ITC for registered importers — effectively making import IGST tax-neutral for business imports. BCD and SWS are not available as ITC — they are a permanent cost. FTAs reduce BCD on qualifying goods from treaty countries.

Pre-GST: central excise on manufacturing + service tax on services + state VAT on sales + CST on inter-state sales. Taxes were levied on taxes (no cross-credit between excise and VAT; no credit of CST). This cascading added 25–30% hidden tax cost in some supply chains. GST replaced this with a single credit chain — CGST, SGST, and IGST credit flows freely along the supply chain, except for blocked credits under Section 17(5). The cascading effect now exists only for BCD on imports and excise on petroleum.

Key planning areas: (a) correct HSN/SAC to minimise rate without misclassification risk; (b) supply chain structuring — where goods are manufactured and from where they are billed affects IGST vs SGST incidence; (c) choosing the right entity for ISD registration to maximise ITC pooling and distribution; (d) separating exempt supplies into a different legal entity to avoid Rule 42 proportionate ITC reversal; (e) using SEZ/EOU status for export-oriented operations to achieve effective zero-GST environment.