IGST on Imports: Claiming Input Tax Credit from the Bill of Entry

When you import goods, customs collects basic customs duty, social welfare surcharge, and integrated GST (IGST) — plus compensation cess on certain goods. Only the IGST and the compensation cess are available as input tax credit. Basic customs duty and the surcharge are costs that go into the value of the goods.

The document is the bill of entry

For imports, the bill of entry is the document on which you take credit (Rule 36(1)(d) of the CGST Rules). There is no supplier invoice from an Indian GSTIN. Bill-of-entry data flows from the customs system (ICEGATE) to the GST system, and appears in your GSTR-2B in the import section — imports from overseas and supplies from SEZ units are shown separately.

Conditions to check

• The bill of entry is filed with your GSTIN. The importer's IEC and the GSTIN must be linked; if the bill of entry is filed under the wrong GSTIN (a different state registration), the credit goes to that registration.
• The goods are for business use and not blocked under Section 17(5).
• The bill of entry appears in GSTR-2B for the period. If it does not, check the reference date and the ICEGATE data with your customs broker.
• You claim within the time allowed under Section 16(4).

Monthly routine

1. Collect every bill of entry for the month from your customs broker, with the duty payment challan.
2. Record the import: value of goods, basic customs duty and surcharge (added to inventory or asset cost), and IGST and cess (to input credit).
3. Match each bill of entry number and IGST amount to the import section of GSTR-2B.
4. For differences, check the port code, bill of entry date and amendments (re-assessment can change IGST).
5. Claim the matched IGST in GSTR-3B; keep unmatched ones on a watch list.

Common reasons credit is lost

• Bill of entry filed with another GSTIN of the same PAN (for example, the head-office state instead of the warehouse state).
• Credit taken on the gross duty, including basic customs duty — later reversed with interest.
• Imports booked at the broker's invoice total without separating duty components.
• Credit claimed after the time limit.

Services from abroad

Imports of services work differently: you generally pay GST under reverse charge on the service, issue a self-invoice and then claim it as credit in the same return if eligible. See the reverse-charge path in Bebaak's GST credit guide.

Exporters and refunds

If you also export, import IGST credit feeds the refund route you use — export under LUT with a refund of accumulated credit, or payment of IGST on exports with a refund of that IGST. Keep the credit records clean; refund officers check them. EXIMFlow keeps shipments, bills of entry and shipping bills with their documents.

Worked example (illustrative)

A company imports machinery parts with an assessable value of ₹10,00,000. Customs levies basic customs duty of 7.5% (₹75,000) and a social welfare surcharge of 10% of the duty (₹7,500). IGST at 18% is charged on the assessable value plus these duties — 18% of ₹10,82,500 = ₹1,94,850. The company adds ₹82,500 (duty and surcharge) to the cost of the parts and takes ₹1,94,850 as IGST credit after matching the bill of entry in GSTR-2B. (Duty rates depend on the tariff heading and any exemptions; these are only illustrative.)

Common mistakes

• Credit claimed on basic customs duty.
• Bill of entry under the wrong GSTIN.
• Re-assessed bills of entry not updated in the books.
• No monthly match against the import section of GSTR-2B.

Documents to keep

Keep the bill of entry, the duty payment challan, the out-of-charge order, the supplier's commercial invoice, the airway bill or bill of lading and the broker's invoice together for each import. Auditors and GST officers ask for the bill of entry first, and refund officers for exporters ask for all of them.