It’s been nearly a week into India’s one of the most ambitious tax reforms. Some of the business houses already started billing under GST. So time has come to know more details about GST apart from the GST Act. In this episode, we will discuss about the export procedure under GST to give a basic guideline to the exporter. So sit back, relax & enjoy the write-up!
Under section 7(5) of IGST Act, supply will be treated, as inter-state supply when the supplier is located in India and the place of supply is outside India or place of supply is SEZ unit. Further, exports would be considered as “Zero rated supply” under section 16 of IGST Act.
Essentially, any person making zero rated supply (i.e. any exporter) shall be eligible to claim refund under either of the following options, namely:-
(a) he may supply goods or services or both under bond or Letter of Undertaking (LUT), subject to such conditions, safeguards and procedure as may be prescribed, without payment of integrated tax and claim refund of unutilised input tax credit; or
(b) he may supply goods or services or both, subject to such conditions, safeguards and procedure as may be prescribed, on payment of integrated tax and claim refund of such tax paid on goods or services or both supplied, in accordance with the provisions of section 54 (Refunds) of the Central Goods and Services Tax Act or the rules made there under.
For the option (a), procedure to file refund has been outlined in the Refund Rules under GST. The exporter claiming refund of IGST will file an application electronically through the Common Portal, either directly or through a Facilitation Centre notified by the GST Commissioner. The application shall be accompanied by documentary evidences as prescribed in the said rules. Application for refund shall be filed only after the export manifest or an export report, as the case may be, is delivered under section 41 of the Customs Act, 1962 in respect of such goods.
For the option (b),the shipping bill filed by an exporter 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 the person in charge of the conveyance carrying the export goods duly files an export manifest or an export report covering the number and the date of shipping bills or bills of export and the applicant has furnished a valid return.
For both option (a) and (b) exporters have to provide details of GST invoice in the Shipping bill. ARE-1 which is being submitted presently shall be dispensed with except in respect of commodities to which provisions of Central Excise Act would continue to be applicable.
Procedure regarding LUT & refund of IGST is governed by rule 96A of CGST Rules, 2017 (as on 01.07.2017). Based on the said said rule, several communications, circulars etc here are the step by step guidelines to the exporters who are going to export supplies under GST-
- Though as per Trade notice 9 dated 12.06.2017 issued by ministry of commerce & industry, DGFT system will undertake this migration & the existing IEC holders are not required to undertake any additional exercise in this regard, exporters should take utmost care to check whether the authority correctly updated the IEC or not. It will ensure flawless import-export procedure under GST.
- Registered person should submit a bond or Letter of Undertaking (LUT), prior to export. [Refer rule 96A para 1]
- The said bond or LUT to be submitted to the Jurisdictional DC/AC in FORM GST RFD -11 either through online or offline mode.
- Exporter to generate GST invoice as per section 31 & Rule 41 of CGST Rules 2017, mentioning GSTIN number.
- The said supply will reflect in GSTR -1 for the month having details of invoice no. & GSTIN.
- 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 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
- Shipping bill forms have also been modified to capture details such as GSTIN, export GST invoice number etc. The exporter shall declare item wise taxable value & corresponding IGST on the shipping bill.
- For services, realization of convertible foreign exchange is the criteria. Exporter of Services need to feed relevant details to effect the same in GSTR -1
- Once export takes place, exporter will file for EGM (Export General Manifest). The confirmation of export details by Customs shall be made accordingly once EGM is filed.
- Exporters are required to provide shipping bill details, BRC, GST invoice no. etc. in GSTR -1 once export is confirmed by Customs.
- The information provided in GSTR-1 with regard to export of goods shall be validated by the customs EDI system to confirm export.
- All the validation related to IGST refund or flow of IGST credit or generation of proof of export shall happen electronically between Customs EDI & GSTN server.
- Taxpayers (exporters) shall be granted refund of IGST paid by him on the exported goods based on the above validation by Customs EDI system. This validation will also act as the proof of export in case the exporter has made the supply under bond or LUT.
- Time limit for export as per Rule 96A is:
- 3 months from the date of issue of invoice for Goods
- 1 year, or such further period as may be 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 exchange
- Where the goods are not exported within the time specified above, the exporter needs to pay applicable duty along with interest 15 days after the expiry of 3 months or 1 year as the case may be.
- Where the goods are not exported within the time specified and the registered person fails to pay the amount mentioned in the said sub-rule, the export as allowed under bond or Letter of Undertaking shall be withdrawn forthwith and the said amount shall be recovered from the registered person in accordance with the provisions of section 79.
- The export as allowed under bond or Letter of Undertaking withdrawn shall be restored immediately when the registered person pays the amount due
- It may be seen that as per provision of GST law, the export as allowed under the bond or LUT shall be withdrawn forthwith in case IGST with interest thereon is not paid within the period indicated above
- The provisions shall apply, mutatis mutandis, in respect of zero-rated supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit without payment of integrated tax
Author Pralay Chakraborty is GST Professional & can be reached at 9705941371, firstname.lastname@example.org
Disclaimer: The contents of this document are solely for informational purpose. It does not constitute professional advice or a formal recommendation. While due care has been taken in preparing the document, the existence of mistakes & omissions herein are not ruled out. The author does not accept any liabilities for any loss or damage of any kind arising out of any inaccurate or incomplete information in this document nor for any actions taken in reliance thereon. No part of this document should be distributed or copied without express written permission of the author.