Deemed Export benefit under GST

“Deemed Exports” refer to those transactions in which goods supplied do not leave country, and payment for such supplies is received either in Indian rupees or in free foreign exchange. Supply of goods as specified in Paragraph 7.02 of Foreign trade policy shall be regarded as “Deemed Exports” provided goods are manufactured in India.

Position of Deemed export under GST

1. Section 2(39) of CGST Act defines : “deemed exports” means such supplies of goods as may be notified under section 147;

2. Section 147 of CGST Act: The Government may, on the recommendations of the Council, notify certain supplies of goods as deemed exports, where goods supplied do not leave India, and payment for such supplies is received either in Indian rupees or in convertible foreign exchange, if such goods are manufactured in India.

3. Accordingly, Notification No. 48/2017-Central Tax Dated 18th October, 2017 issued in exercise of the powers conferred by section 147 of the Central Goods and Services Tax Act, 2017 which notifies that supplies of goods by a registered person to EOUs etc. would be treated as deemed exports under Section 147 of the CGST Act, 2017 and refund of tax paid on such supplies can be claimed either by the recipient or supplier of such supplies.

4. Notification No. 49/2017-Central Tax Dated 18th October, 2017 notify the evidences required to be produced by the supplier of deemed export supplies for claiming refund under rule 89(2)(g) of the CGST rules, 2017.

5. Notification No. 47/2017 – Central Tax Dated 18th October, 2017 issued to amend CGST Rules with regard to application to be filed for refund of GST and amendment of GST RFD-01 form.

6. Deemed export Benefit options as below

Option 1

  • Supply of goods to EOU would be treated as ‘Deemed Exports’
  • Supplier to issue tax invoice to EOU charging applicable GST.
  • Amount charged as GST would be paid and claimed as by Supplier from the GST authorities subject to conditions.

Option 2

Alternatively, suppliers could continue to charge GST on supplies to EOU as a normal process and EOU to claim credit and refund of the same subsequently.

Conditions

In this regard, following conditions to be fulfilled for claiming above exemption under Option 1.

1. EOU to self certify the copy of Tax invoice issued by the Supplier and share the same with the Supplier of goods.

2. An undertaking by the EOU stating:

– No credit would be claimed on the GST charged by the Supplier in the Tax invoice

– No refund would be claimed on the supplies received from the Supplier

– Supplier shall claim refund of GST charged in the Tax invoice

Subsequently, Notification No. 33/2015-2020 Dated: 13 October, 2017 issued under foreign trade policy to amend various paras of FTP 2015-2020.

Circular No. 14/14 /2017- GST dated the 6th November, 2017 issued with regard to Procedure regarding procurement of supplies of goods from DTA by Export Oriented Unit (EOU) / Electronic Hardware Technology Park (EHTP) Unit / Software Technology Park (STP) Unit / Bio-Technology Parks (BTP) Unit under deemed export benefits under section 147 of CGST Act, 2017 – reg.

According to said circular following procedure to be followed in addition to other conditions

In addition to above, following procedure to be followed by EOU

The recipient EOU shall maintain records of such deemed export supplies in digital form, based upon data elements contained in “Form-B” The software for maintenance of digital records shall incorporate the feature of audit trail. While the data elements contained in the Form-B are mandatory, the recipient units will be free to add or continue with any additional data fields, as per their commercial requirements. All recipient units are required to enter data accurately and immediately upon the goods being received in, utilized by or removed from the said unit. The digital records should be kept updated, accurate, complete and available at he said unit at all times for verification by the proper officer, whenever required. A digital copy of Form – B containing transactions for the month, shall be provided to the jurisdictional GST officer, each month (by the 10th of month) in a CD or Pen drive, as convenient to the said unit.

Disclaimer: This information contained herein is in summary form and is therefore intended for general purpose only. This article is not intended to address the circumstances of any particular individual or entity. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. This article is not a substitute for detailed research and opinion. Before acting on any matters contained herein, reference should be made to subject matter experts and professional judgement needs to be exercised.

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2 Comments

  1. Ashok Kumar Kanunga says:

    SUPPLIER OF EOU IS LIABLE TO CHARGE TAX INVOICE OR NOT???? IF HE CHARGED THEN HE LIABLE TO PAY THROUGH GSTR-3B —- THEN HOW TO GET REFUND FROM DEPARTMENT?? WHAT IS THE PROCEDURE??

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