“Explore the conditions for tax-free export supplies under Rule 96A of CGST Rules, 2017. Learn about the significance of Form GST RFD-11, export timelines, payment requirements, and consequences of non-compliance. Understand how non-compliance affects the ability to export under a bond or Letter of Undertaking (LUT) and the process for restoration.”
The government of any nation plays a significant role in supporting the export sector, which significantly contributes to the country’s economic growth and balances its trade deficit. To this end, one of the most noteworthy steps is to provide tax-free export supplies, mirroring the domestic market supplies, given that specific requirements are adhered to. The framework under which this is executed is outlined in Rule 96A of the Central Goods and Services Tax (CGST) Rules, 2017.
Page Contents
Tax-Free Export Supplies
As the law stands, an exporter can supply goods or services for export without the need for tax payment. However, to do this, he is required to furnish a bond or Letter of Undertaking (LUT) in Form GST RFD-11 to the jurisdictional commissioner. The primary aim of this stipulation is to safeguard the interests of the revenue department while promoting the ease of exporting goods and services.
Role and Implications of Form GSTR RFD-11
Form GSTR RFD-11, once furnished, is not merely a piece of document but an agreement that carries substantial implications. It binds the exporter to a commitment to pay the tax, along with an interest as specified under Section 50 of the CGST Act, should they fail to fulfil the conditions laid out.
Export Timeline and Payment Requirements
There are two essential requirements that an exporter is obligated to meet. Firstly, the exporter should ensure that the goods are exported within three months from the date of issue of the invoice. This timeline underscores the commitment to expedite the export process, ensuring a quick turnaround. Secondly, the exporter should receive payment for the export of services within one year from the date of the invoice’s issue. This condition ensures the successful closure of the export transaction within a reasonable timeframe.
Consequences of Non-compliance
Non-compliance with the export timeline or payment requirements carries certain consequences. If the exporter fails to either export the goods within the stipulated three months or receive payment for the export of services within one year, he must pay the applicable tax and interest within 15 days from the expiry of these timeframes.
In cases where the exporter fails to pay the tax amount along with the applicable interest, due to non-compliance with the conditions, the provision to export under the bond or LUT is withdrawn. Further, the outstanding amount will be recovered under Section 79 of the CGST Act. This section essentially enables the government to recover any unpaid dues, preserving the integrity of the system.
Restoration of Bond or LUT
Despite the consequences for non-compliance, the system also provides a mechanism for reinstatement. Once the exporter pays the due amount, the bond or LUT will be restored. Consequently, the exporter can resume their operations and continue to export supplies without the burden of tax payment.
To conclude, these initiatives under Rule 96A of the CGST Rules, 2017, reflect the government’s commitment to making the export process easier, thereby promoting exports. It strikes a balance between fostering a business-friendly environment and ensuring adherence to regulatory norms.
Reference: Rule 96A of CGST Rules, 2017
Author Bio
