Import from Foreign Vendor
Purchasing goods in India from a place outside India is import of goods. For services, if the supplier is located outside India, the recipient is located in India and the place of supply is in India, then it is called Import of services. Purchase of goods and/or services from a foreign vendor is subject to reverse charge i.e. the person importing goods or services has to remit tax to the government.
Process for purchase from a foreign vendor has been explained in this document.
Create a purchase invoice
- Choose the
icon, enter Purchase Invoice, and then choose the related link. - Select Vendor on Purchase Invoice header, GST vendor type should be Import.
- Select Item Code for goods, G/L Account for Service purchase and Fixed Asset for Fixed Asset purchase on Purchase Invoice line. GST Group Code, HSN/SAC Code and GST Credit value should be selected as Availment if the tax input credit is available or else Non-Availment on the Item or G/L Account.
- GST Credit option can be changed in document line.
- In case of import of goods from foreign vendor, IGST is to be calculated on GST Assessable Value + Basic Custom Duty.
For example, purchase invoice is issued INR 10000, Custom Duty is INR 1000. Therefore, on GST Assessable Value INR 11000,(IGST @18%) has to be charged. Calculation base: (18% on 11,000 GST Assessable Value + 1,000 BCD) (12,000*18%).
GST calculation will appear in the Fact Box, as following:
Component Amount Transaction Value 10000 GST Base Amount 11,000 Custom Duty (BCD) 1000 IGST 2160 (18% on 11,000 GST Assessable Value + 1,000 BCD) (12,000*18%) GL Entries for import of goods from foreign vendor where input tax credit is available, will be as following:
Particulars Amount Purchase Account (Transactional Value+ BCD) 11000 IGST Receivable Account (GST on GST Assessable Value + BCD) 2160 Customs House Account (GST Amount + BCD) -3160 Vendor Account (Transaction Value) -10000 GL Entries for import of goods from foreign vendor where input tax credit is not available, will be as following:
Particulars Amount Purchase Account (Transactional Value+ BCD + IGST Amount) 13160 Customs House Account (GST Amount + BCD) -3160 Vendor Account (Transaction Value) -10000 Import of Fixed Asset from foreign vendor, IGST is to be calculated on GST Assessable Value + Basic Custom Duty.
For example, purchase invoice is issued for INR 10000, Custom Duty INR 1000, GST Assessable Value INR 11000,(IGST @18%) has to be charged. Calculation base: (18% on 11,000 GST Assessable Value + 1,000 BCD) (12,000*18%).
GST Calculation will appear in the Fact Box, as following:
Component Amount Transaction Value 10000 GST Base Amount 11,000 Custom Duty (BCD) 1000 IGST 2160 (18% on 11,000 GST Assessable Value + 1,000 BCD) (12,000*18%) GL Entries for import of goods from foreign vendor where input tax credit is available, will be as following:
Particulars Amount Fixed Asset Increase During the Year Account (Transactional Value+ BCD) 11000 IGST Receivable Account (GST on GST Assessable Value + BCD) 2160 Customs House Account (GST Amount + BCD) -3160 Vendor Account (Transaction Value) -10000 GL Entries for import of goods from foreign vendor where input tax credit is not available, will be as following:
Particulars Amount Fixed Asset Increase During the Year Account (Transactional Value+ BCD + IGST Amount) 13160 Customs House Account (GST Amount + BCD) -3160 Vendor Account (Transaction Value) -10000 Import of services from foreign vendor.
For example, purchase invoice is issued for INR 10000, (IGST @18%) has to be charged.
GST Calculation will appear in the Fact Box, as following:
Component Amount GST Base Amount 10000 IGST 1800 GL Entries for import of services from foreign vendor where input tax credit is available, will be as following:
Particulars Amount Services Account 10000 IGST Receivable (Interim) Account 1800 IGST Payable (Interim) Account -1800 Vendor Account (Transaction Value) -10000 GL Entries for import of services from foreign vendor where input tax credit is not available, will be as following:
Particulars Amount Services Account 11800 IGST Payable (Interim) Account -1800 Vendor Account -10000 Import of Services from Import Associate Vendor.
For example, purchase invoice is issued for INR 10000, (IGST @18%) has to be charged.
GST Calculation will appear in the Fact Box, as following:
Component Amount GST Base Amount 10000 IGST 1800 GL Entries for import of services from import associate vendor where input tax credit is available,will be as following:
Particular Amount Services Account 10000 IGST Receivable Account 1800 IGST Payable Account -1800 Vendor Account -10000 GL Entries for import of services from import associate vendor where input tax credit is not available, will be as following :
Particular Amount Services Account 11800 IGST Payable Account -1800 Vendor Account -10000
Note
Import Transaction should be in Foreign Currency.