Article explains concept of Deemed exports under GST (Revised Model GST Law)
SECTION 2(37) DEEMED EXPORTS:-
In continuation to our updates on definitions in Revised Model GST Law, we hereby discuss the definition of deemed export under GST which reads as follows:
“Deemed Exports under GST”, as notified by the Central Government/State Government on the recommendation of the Council, refer to those transactions in which the goods supplied do not leave India, and payment for such supplies is received either in Indian Rupees or in convertible foreign exchange;
The term ‘deemed exports’ is often referred in the context of Foreign Trade Policy but it is observed that the proposed GST regime seeks to provide definition of deemed exports under GST separately. The same definition of deemed exports was incorporated in the old GST Law also. If we compare the definition of deemed exports given under GST Law with that given in the Foreign Trade Policy, we find that there is not much difference in the meaning of deemed exports. The definition of deemed exports in FTP 2015-2020 reads as follows:-
7.01 Deemed Exports
“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 below shall be regarded as “Deemed Exports” provided goods are manufactured in India.
It is pertinent to mention that deemed exports under DGFT cover supply of goods under advance authorisation, supply to EOU/STP/EHTP/BTP, supply of capital goods against EPCG etc. Since the objective of introducing the concept of deemed exports under FTP is different. It allows the one of three benefits viz. refund of Terminal excise duty, duty drawback and advance authorisation to supplier of goods. The proposed revised GST Law proposes to remove any ambiguity as regards transactions that will be considered as deemed exports. This is for the reason that under GST Law, relevance of deemed exports is limited to grant of refund of taxes on supply of goods regarded as deemed exports. Even this will not allow the removal of gods at nil rate of duty which is allowed in present regime particularly for supply to 100% EOU. In order to remove the possibility of any dispute, it has been mentioned in the GST Law that the Central Government/State Government on the recommendation of GST Council will notify the transactions to be considered as deemed exports so that assessees do not claim refund of taxes on deemed exports considered under FTP Laws.
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