Section 21 is a transition rule for imported services that straddled 1 July 2017: it taxes the import under IGST if it took place on or after the appointed day, while avoiding double tax on what was already paid as service tax.
Key points
- Under section 21 of the IGST Act, 2017, an import of services made on or after the appointed day (01.07.2017) is taxable under IGST even if the transaction was initiated before that day.
- If service tax on the import was paid in full under the earlier law, no IGST is payable; if paid in part, only the balance is payable.
- A transaction is deemed initiated before the appointed day if the invoice was issued or any payment made before it.
The provisions
21Imported services spanning the appointed day
Statutory text
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.
Statutory text as published on the CBIC tax information portal, as on 03.10.2026; the numbered notes record each amendment. Official source
Common questions
- Was IGST payable on services imported after 1 July 2017 under a contract made earlier?
- Yes, under section 21 of the IGST Act, less any service tax already paid on the import under the earlier law.
Commentary and case notes checked against the judgments and CBIC sources on 04.10.2026.
What it means
The import is taxed by reference to when it is made, not when it was agreed. A contract signed in June 2017 for services received in August 2017 attracts IGST. The provisos prevent double taxation: service tax paid in full under the existing law (the Finance Act, 1994) means no IGST; partial payment means IGST on the balance only. The Explanation treats a transaction as initiated before the appointed day if the invoice was issued, or any payment made, before it.
The section matters now mainly in old disputes; for imports today, the ordinary charge under section 5 applies.