Preparing to export

A guide to Indian GST and what it means for Australian exporters

In India, the Goods and Service Tax Act was passed in the Parliament on 29 March 2017 and came into effect on 1 July 2017. Indian GST integrates the former taxes such as central excise duty, services tax, additional customs duty, surcharges and state-level value added tax into a single, national tax.

Here’s a bit more about how GST in India works, and how it could impact you if you export goods and services to the country.

How does GST in India work?

GST is a tax credit mechanism where tax is levied on goods and services at each point of sale or provision of service. Under this tax regime, the business providing goods or services can claim an input credit of tax paid (i.e. input GST) for purchasing the goods or procuring the service.

India has a dual GST system, which means both Central and State taxes are collected at the point of sale. All goods and services, barring a few exceptions, are subject to GST.

The Indian GST rate differs for varying goods and services and is split up into five different rates: 0%, 5%, 12%, 18% and 28%. Some exceptions to this are petroleum products, alcoholic drinks and electricity, which are taxed separately by individual state governments as per the previous tax system.

How do Indian tax laws impact you as an exporter?

Prior to the introduction of GST, companies coming into India to do business often found it difficult to comprehend the country’s complex tax laws. 

However, thanks to the introduction of GST, systems are now simplified and companies no longer need to worry about sales tax implications while spreading sales across Indian states.

Now, imports into India only attract GST and basic custom duty without additional charges like countervailing and special duty. In many cases, this can bring down the overall duties/taxes payable and make Australian goods more competitive in Indian markets.

Are you preparing to export?

Whether you are an experienced exporter or exploring export opportunities for the first time, it's critical to understand what is required and to stay up to date. Our friendly team can guide you through the process of obtaining the right export documents you require to ensure smooth customs clearance and facilitate duty exemptions.


 

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