Do You Need to Pay IGST for Imports Under MOOWR? (2026)

No, IGST under MOOWR is not payable at the time of import today. Goods enter a licensed Section 65 warehouse on a Bill of Entry for warehousing, with Basic Customs Duty and IGST both deferred under the Customs Act, 1962.

That position is on the statute book to change. Section 65A, inserted by the Finance Act, 2023, will require IGST and Compensation Cess to be paid at deposit. Its effective date has not been notified.

IGST Under MOOWR Today

Both BCD and IGST stand deferred while goods remain in bonded status. IGST becomes payable when goods, or the resultant goods containing them, are cleared for home consumption, on an ex-bond Bill of Entry.

Where resultant goods are exported directly from the warehouse, no IGST is payable on the imported inputs contained in them. No notification under Section 65A has yet been issued, so the deferment continues to apply.

IGST Under MOOWR Is Creditable, So Deferment Is a Float

Be precise about the benefit. An importer paying IGST at the border claims input tax credit and sets it off against output GST. IGST is recoverable. It is not a cost in the way BCD and Social Welfare Surcharge are.

What MOOWR removes on IGST is the cash-flow gap between paying at the border and recovering the credit. That gap is real, but the durable working capital benefit sits in the non-creditable duties. Where IGST is not creditable to your business, the deferment is worth considerably more.

What Section 65A Will Change

Section 65A does more than make IGST payable. It restructures the entry itself:

• Goods deposited must be goods on which IGST and Compensation Cess have already been paid, under Section 3(7) and 3(9) of the Customs Tariff Act, 1975.
• A Bill of Entry for home consumption is filed, not a Bill of Entry for warehousing.
• Only the unpaid duties remain deferred. The goods are warehoused goods only for the purpose of the duty payable other than that tax and cess.
• Inter-warehouse transfers will require a home consumption Bill of Entry with IGST and cess paid before removal.
• Section 59 is modified, with the bond covering duty assessed but not paid.

When Will Section 65A Apply?

The provision takes effect from such date as the Central Government may notify. No date has been notified by CBIC. Until then, IGST under MOOWR remains fully deferred.

Two safeguards matter. Section 65A will apply only to goods warehoused after the date of notification, not to goods already deposited. And the Government is empowered to exempt categories of goods, importers, or industry sectors from its purview. Telecom, pharmaceutical, medical device, and solar sectors have been actively seeking such exemption.

What It Would Mean for Your Cash Flow

If notified, IGST under MOOWR and Compensation Cess become an upfront outflow at deposit rather than at clearance. For a manufacturer importing large volumes of inputs, that reverses a substantial part of the working capital benefit the licence was obtained for.

The credit position does not change. IGST paid at deposit remains creditable. What changes is the timing, and therefore the cost of financing it.

Compensation Cess Is Not Creditable in the Same Way

Compensation Cess deserves separate attention. Credit of Compensation Cess may only be used against Compensation Cess liability, not against IGST or CGST. For importers of goods attracting cess, an upfront payment at deposit is a harder cost to absorb.

Planning Around the Uncertainty

Model your import programme on both bases: IGST deferred as today, and IGST payable at deposit. Size the financing cost of the difference. If Compensation Cess applies to your goods, weight that scenario more heavily.

Track whether an exemption notification covers your sector before committing to a large bonded import cycle.

How JPARKS INDIA Helps

At JPARKS INDIA, we model the IGST position under both the current regime and a notified Section 65A, separate creditable from non-creditable duties, and flag Compensation Cess exposure before it becomes an upfront charge. Having served 500+ importers and exporters since 2018, we keep the numbers honest. Learn more about our MOOWR scheme services or book a free consultation.

Frequently Asked Questions

Q1. Do you need to pay IGST for imports under MOOWR?

Not at import. IGST is deferred along with BCD and becomes payable when goods or the resultant goods containing them are cleared for home consumption. No notification under Section 65A has been issued.

Q2. Has the IGST benefit been withdrawn under MOOWR?

Section 65A, inserted by the Finance Act 2023, provides for IGST and Compensation Cess to be paid at deposit. Its effective date has not been notified, so IGST deferment continues today.

Q3. Is IGST paid under MOOWR creditable?

Yes. IGST paid on import or at clearance is available as input tax credit against output GST, subject to conditions. Deferring it removes a cash-flow gap rather than a cost.

Q4. Will Section 65A apply to goods already in my warehouse?

No. It will apply only to goods warehoused after the date of notification. Goods already deposited, or permitted to be removed for deposit, before that date are outside its scope.

Q5. Do exports from a MOOWR unit attract IGST?

No IGST is payable on the imported inputs contained in resultant goods exported directly from the warehouse under a shipping bill.

Related guides

• Start here: What is the MOOWR Scheme in Customs?
• Can MOOWR Be Used for Machinery Imports? (2026 Guide)
• Can Customs Revoke MOOWR Approval? (2026 Guide)
• Is the MOOWR Scheme Shutting Down or Facing Changes? (2026)
• MOOWR Implementation Challenges: What Companies Face (2026)
• Free export import tools and calculators

If you want this done without the back and forth, we provide MOOWR approval support.