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EXPORT OF GOODS UNDER GST

EXPORT OF GOODS UNDER GST

Sec 2(5) of the IGST Act, defines “export of goods” with its grammatical variations and cognate expressions, means taking goods out of India to a place outside India.

Place of supply in case of export of goods:

In case of export of goods, place of supply shall be the location outside India where the goods are exported.

Example*

Case

Location of

supplier

Location of

goods

Goods

supplied to

Location of

recipient

Place of supply

1

Assam

Assam

Thailand

Assam

Thailand

2

Tamil Nadu

Kashmir

China

Texas

China

3

Sri Lanka

Kerala

Sri Lanka

Sri Lanka

Sri Lanka

4

Maharashtra

Dubai

Iran

Iran

Not an export

*Source - Background Material On GST Acts And Draft Rules, 2017, ICAI

GST on export of goods

Export of goods will be treated as ‘zero-rated supplies’. Accordingly, no GST would be charged on such supplies. But the exporter will be eligible to claim the corresponding input tax credits.

Important aspects of export of goods:

  1. The movement of goods is alone relevant and not the location of the exporter/ importer.
  2. In case of goods the shipping bill is the only document required to be filed with the Customs for making exports. Requirement of filing the ARE 1/ARE 2 has been done away with.
  3. The supplies made for export are to be made under self-sealing and self-certification without any intervention of the departmental officer.
  4. The shipping bill filed with the Customs is treated as an application for refund of IGST and shall be deemed to have been filed after submission of export general manifest and furnishing of a valid return in Form GSTR- 3 by the applicant.
  5. Unlike export of services which requires fulfillment of certain conditions for a supply to qualify as ‘export of services’ like the nature of currency in which payment is required to be made, location of the exporter etc., export of goods doesn’t require fulfillment of any such conditions.
  6. The exporter may utilize such credits for discharge of other output taxes or alternatively, the exporter may claim a refund of such taxes.

Example of physical exports*:

ABC from Chennai supplies goods required by PQR in Delhi to effect exports to Germany.

Option I:

  1. ABC to charge IGST (Rs.100) to PQR
  2. PQR to avail input tax credit
  3. PQR to issued invoice for €15
  4. PQR to ensure no IGST is charged in the Euro invoice
  5. PQR to bring proof-of export and satisfy all other conditions prescribed
  6. PQR to claim refund of input tax credit of Rs.100 being maximum amount related to the outward export supply.

Option II:

  1. ABC to charge IGST (Rs.100) to PQR
  2. PQR to avail input tax credit
  3. PQR to issued, invoice for €15
  4. PQR to ensure no IGST is charged in the Euro invoice
  5. But, PQR to debit electronic credit ledger with IGST applicable of Rs.180 on the export (assume sufficient balance in credit ledger from all other inputs,input service and capital goods)
  6. PQR to bring proof-of export and satisfy all other conditions prescribed
  7. PQR to claim refund of Rs.180 debited in electronic credit ledger in respect of export.

*Source - Background Material On GST Acts And Draft Rules, 2017, ICAI

Invoice in case of export of goods

In case of export of goods, the invoice shall carry an endorsement “SUPPLY MEANT FOR EXPORT ON PAYMENT OF IGST” or “SUPPLY MEANT FOR EXPORT UNDER BOND OR LETTER OF UNDERTAKING WITHOUT PAYMENT OF IGST”, as the case may be, and shall, contain the following details:

      (i)  name and address of the recipient;

      (ii) address of delivery; and

      (iii) name of the country of destination:

Conditions for claim of refund under export of goods

The exporter will be eligible to claim refund under the following situations:

  1. He may export the goods under a Bond or Letter of Undertaking, without payment of IGST   and  claim refund of unutilized input tax credit; or
  2. He may export the goods upon payment of IGST and claim refund of such tax paid. This refund can be claimed upon receipt of information regarding furnishing of valid return in Form GSTR-3 by the exporter from the common portal. The Customs shall process the claim for refund and an amount equal to the IGST paid in respect of each shipping bill shall be credited to the bank account of the exporter.

 

Procedure for claim of refund under export of goods

A person claiming refund in case of export of goods has to file an application electronically in FORM GST RFD-01 through the Common Portal, either directly or through a Facilitation Centre notified by the Commissioner.

The refund should be claimed within 2 years from the Relevant Date which is the Date on which proper officer gives an order for export known as “LET EXPORT ORDER”.

The shipping bill filed with the Customs is treated as an application for refund of IGST and shall be deemed to have been filed after submission of export general manifest and furnishing of a valid return in Form GSTR- 3 by the applicant

In case of claim for refund of IGST paid on account of export of goods, the acknowledgment shall be issued within a period of three days of filing of such claim.

Where any deficiencies are noticed, the proper officer shall communicate the deficiencies to the applicant in FORM GST RFD-03 through the Common Portal electronically, requiring him to file a fresh refund application after rectification of such deficiencies.

Provisional refund of ninety percent of the total amount claimed (excluding input tax credit not yet finalized) shall be granted to the exporter of goods within a period not exceeding seven days from the date of acknowledgement after scrutiny of the claim and the evidence by a proper officer. The officer shall  make an order in FORM GST RFD-04, sanctioning the amount of refund due to the said applicant. Remaining ten percent may be refunded after due verification of documents furnished by the applicant.

The proper officer shall issue a payment advice in FORM GST RFD-05 for the amount sanctioned under sub-rule (2) and the same shall be electronically credited to any of the bank accounts of the applicant mentioned in his registration particulars and as specified in the application for refund.

Disclaimer - The information provided in this document is for general information only. It is based on the information available publicly and the advice received from various professional experts regarding the GST law. The user of this document should be aware that the interpretation or implications of relevant GST rules may change/vary depending upon circumstances applicable to the user.

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