What is Section 9 Of IGST?

Introduction

The Goods and Services Tax (GST) system in India has brought about substantial changes to taxation. Specifically, under the Integrated Goods and Services Tax (IGST) Act, Section 9 addresses the imposition and collection of taxes on imports and exports. This article aims to provide an overview of the provisions outlined in the IGST Act, focusing on levy and collection aspects, to facilitate a thorough understanding of the tax framework governing cross-border transactions.

What is Section 9 Of the IGST Act?

Section 9 of the Integrated Goods and Services Tax (IGST) Act pertains to the levy and collection of tax on imports and exports. It outlines the specific provisions and regulations governing the taxation framework for cross-border transactions under the IGST regime in India. This section is crucial for understanding how taxes are imposed and collected in the context of international trade within the GST system.

Levy and Collection as per Section 9 of the IGST Act

The IGST Act lays down specific provisions regarding the levy and collection of tax on imports and exports. The following are the main factors to take into account:

1. Levy of IGST on Import: Section 9(1) of the IGST Act, 2017, provides that there shall be a levied tax called the Integrated Goods and Services Tax on all goods and services imported into India. The tax shall be levied at such rates as may be notified by the Central Government on the recommendation of the GST Council. The tax shall be levied at the point when the import duties are leviable on the goods under the Customs Act, 1962.

2. Levy of IGST on Supply: Section 9(2) of the IGST Act, 2017, provides that the Central Government may, on the recommendation of the GST Council, notify the goods and services on which the IGST shall be levied. The notification may specify the point of levy, the rate of tax, and the value on which the tax shall be levied.

3. Reverse Charge Mechanism: Section 9(3) of the IGST Act, 2017, provides for the levy of tax on the supply of goods or services, or both, by a person who is not registered under the Act. The tax shall be paid by the recipient of such goods or services, or both, under the reverse-charge mechanism.

4. Proviso to Section 9(1): The proviso to Section 9(1) of the IGST Act, 2017, is of paramount importance. It provides that the Customs Tariff Act, 1975, shall take over the levy of IGST on imported goods, leaving IGST under the IGST Act, 2017, inapplicable to imported goods. This means that the basic customs duty levied under Section 12 of the Customs Act, 1962, and Section 3 of the Customs Tariff Act, 1975, shall be levied on imported goods, and IGST shall be levied under sub-section 7 of Section 3 of the Customs Tariff Act, 1975, and sub-section 9 of Section 5 of the IGST Act, 2017, wherever applicable.

Collection of IGST on Inter-State Supplies

The collection of IGST on interstate supplies is governed by Section 5(2) of the IGST Act. This section provides that IGST shall be collected by the Central Government from the supplier of goods or services. The tax shall be payable in the same manner as CGST and SGST are payable. The supplier of goods or services is liable to pay IGST at the time of supply. The supplier can pay IGST either in cash or by way of a bank guarantee.

If the supplier fails to pay IGST, the Central Government may seize the goods supplied by the supplier. The Central Government may also impose a penalty on the supplier for non-payment of IGST.

Conclusion

Section 9 of the IGST Act plays a crucial role in the taxation of imports and exports in India. Understanding the provisions related to the levy and collection of tax is essential for businesses engaged in cross-border transactions. Compliance with the IGST Act ensures that importers and exporters fulfill their tax obligations accurately and on time. By adhering to the prescribed procedures for payment, reporting, and availing of input tax credits, businesses can navigate the complexities of the IGST framework and contribute to a seamless and efficient import-export ecosystem in India.

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