Export Under GST Act, 2017

Exports under goods & service tax Act, 2017

What is Export Of Goods?

As per Section 2(5) of IGST Act, 2017 Export of Goods with its grammatical variation & cognate expression, means taking goods out of India to a place outside India.

What is Export Of Services?

As per Section 2(6) of IGST Act, 2017 Export of services means the supply of any service when:

1. The supplier of service is located in India ;

2. The recipient of service is located outside India ;

3. The place of supply is outside India ;

4. The payment of such service has been received by the supplier of service in convertible foreign exchange ; &

5. The supplier of service & the recipient of the service is not merely an establishment of a distinct person.

Exemption from GST:

Supply of service having a place of supply in Nepal/Bhutan against consideration in the form of Indian currency is exempted from levy of IGST as per Notification no. 42\2017–Integrated Tax (Rate) – 27/10/2017

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http://www.cbic.gov.in/resources//htdocs-cbec/gst/notfctn-42-igst-rate-english.pdf

What is the Treatment of Export under GST?

As per GST Law, treatment for the export of Goods or Service is as follow:

(1) Inter-State supply (As per Sec:7(5) IGST Act)

Export is treated as Inter-State supply under GST and IGST is charge on export.

(2) Zero rated supply (As per Sec.16 (1) IGST Act)

The goods or services exported shall be relieved of GST levied upon them either at the input stage or at the final product stage.

Section 16 (1) of IGST Act, 2017:- Zero Rated Supply:

“Zero Rated Supply” means any of the following supplies of goods or services or both, namely:

1. Export of goods or service or both ; or

2. Supply of goods or service or both to a Special Economic Zone (SEZ) unit or SEZ Developer.

Zero-rated supply does not mean that the goods and services have a tariff rate of ‘0%’ but the recipient to whom the supply is made is entitled to pay ‘0%’ GST to the supplier.

 This provision also specifically expresses that taxes are not exported.

Care must be exercised that while paying taxes, such taxes are not collected from the recipient of goods or services or both. This would result in unjust enrichment.

The exporter may utilize such credits for discharge of other output taxes or alternatively, the exporter may claim a refund of such taxes as per section 54 of CGST or Rules made there under. .

Section 16 (3) of IGST Act, 2017 read with Section 54 of CGST Act, 2017: Option to claim refund:

A registered person making ZERO rated supply of shall be eligible to claim refund under either of the following option:

a. He may supply goods or service or both under BOND or LUT without payment of IGST & claim the refund of unutilized ITC; or

b. He may supply goods or service or both on payment of IGST & claim the refund of IGST paid on goods or service or both supplied.

How exporter can export goods/services under Option 1 – BOND / LUT Method?

As per Rule 96A of CGST Rules, 2017 he may export the Goods/Services under a BOND or Letter of Undertaking, without payment of IGST and claim refund of unutilized input tax credit:

(1) Any registered person availing the option to supply goods or services for export without payment of integrated tax shall furnish, prior to export, a bond or a Letter of Undertaking in FORM GST RFD-11 (Bond and LUT Format) to the jurisdictional Commissioner, binding himself to pay the tax due along with the interest specified under sub-section (1) of section 50 within a period of—

a. 15 days after the expiry of 3 months from the date of issue of the invoice for export, if the goods are not exported out of India; or

b. 15 days after the expiry of 1 year, or any period as allowed by the Commissioner, from the date of issue of the invoice for export, if the payment of such services is not received by the exporter in convertible foreign.

However if the registered person fails to pay the tax along with interest within the period mentioned in clause (a) or clause (b) of the said sub-rule, the facility of export without payment of integrated tax will be deemed to have been withdrawn and if the amount mentioned in the said sub-rule is paid, the facility of export without payment of integrated tax shall be restored.

(2) The details of the export invoices contained in FORM GSTR-1 furnished on the common portal shall be electronically transmitted to the system designated by Customs and a confirmation that the goods covered by the said invoices have been exported out of India shall be electronically transmitted to the common portal from the said system.

Procedural Requirement for LUT Method (ONLINE)

 How exporter can export Goods/Services under Option 2 – Payment of IGST Method ?

As Per Rule 96 of CGST Rules, 2017, Exporter may export goods or service on payment of IGST and claim the refund of integrated tax paid on goods or services exported out of India in the following manner:

(1) The shipping bill filed by an exporter of goods shall be deemed to be an application for refund of integrated tax paid on the goods exported out of India and such application shall be deemed to have been filed only when:-

a. The person in charge of the conveyance carrying the exported goods duly files an export manifest or export report containing the number & date of Shipping Bill / Bill of Export.

b. The applicant has furnished a valid return in FORM GSTR – 3 or FORM GSTR – 3B, as the case may be.

(2) The details of the relevant export invoices in respect of export of goods are contained in FORM GSTR-1 shall be transmitted electronically by the common portal to the system designated by the Customs and the said system shall electronically transmit to the common portal, a confirmation that the goods covered by the said invoices have been exported out of India.