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

  1. Choose the Search for Page or Report icon, enter Purchase Invoice, and then choose the related link.
  2. Select Vendor on Purchase Invoice header, GST vendor type should be Import.
  3. 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.
  4. 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.

See Also

Purchase from Vendor with Overseas Place of Supply

Note

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