Chapter IX - Miscellaneous
Section 21
Section 21: Import of services made on or after the appointed day
Section 21 is a transition rule. An import of services made on or after the appointed day is taxable under the IGST Act even if the transaction began earlier, unless tax was already paid in full under the existing law. If tax was paid in part, only the balance is payable.
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Need advice on Section 21?
This article is for general information. Refer to the Integrated Goods and Services Tax Act, 2017 official text for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
Import of services made on or after the appointed day shall be liable to tax under the provisions of this Act regardless of whether the transactions for such import of services had been initiated before the appointed day:
Provided that if the tax on such import of services had been paid in full under the existing law, no tax shall be payable on such import under this Act:
Provided further that if the tax on such import of services had been paid in part under the existing law, the balance amount of tax shall be payable on such import under this Act.
Explanation.—For the purposes of this section, a transaction shall be deemed to have been initiated before the appointed day if either the invoice relating to such supply or payment, either in full or in part, has been received or made before the appointed day.
Introduction
The section came into force on 1 July 2017 under Notification No. 3/2017-Integrated Tax. Its practical relevance today is mainly to legacy assessments and disputes about transactions that straddled the GST changeover.
Key takeaways
Taxable regardless of initiation date
An import of services made on or after the appointed day is liable to IGST even if the transaction was initiated before that day.
Full or part payment under existing law
No IGST is payable if tax was paid in full under the existing law; if paid in part, the balance is payable under the IGST Act.
When a transaction is 'initiated'
A transaction is deemed initiated before the appointed day if the invoice was received, or payment (full or part) was made, before that day.
How the rule operates
First, establish whether the import of services was made on or after the appointed day. If it was, IGST applies under the Act's normal charging rules, subject to the two provisos.
Then check what tax, if any, was paid under the existing law on the same import. Full payment removes the IGST liability; part payment leaves the balance payable.
The 'initiated' deeming rule
The Explanation deems a transaction initiated before the appointed day if either the invoice for the supply was received, or payment was made in full or in part, before that day. That fact matters for the opening words of the section, but the provisos on prior tax payment decide the final liability.
Practical checklist
Do
- For a legacy dispute, assemble the invoice date, payment dates and evidence of tax paid under the existing law.
- Compute any balance payable only after crediting tax actually paid under the existing law on the same import.
Frequently asked questions
Is Section 21 still relevant?
Mainly for legacy assessments and litigation about imports of services that spanned the move to GST.
What if service tax was paid in part before GST?
Under the second proviso, only the balance amount of tax is payable under the IGST Act.
Need help applying this provision to your situation?
Contact BizeneedLast updated 11 October 2026