As GST has rolled out w.e.f July 1, 2017, there is lot of ambiguity among the industries on the possible impact of GST regime on the their respective industry. One of the major sector “EXPORT” is also been effected from the rolled out of GST. Exporters want to know how GST will hit their sector and impact of same on their services.
Meaning of Export of Services
“Export of Services” as defined under Section 2 (6) of IGST Act, 2017 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 of service is outside India;
4.the payment for such service has been received by the supplier of service in convertible foreign exchange; and
5.the supplier of service and the recipient of service are not merely establishments of a distinct person in accordance with Explanation 1 in section 8 of IGST Act.
PROCEDURCE RELATED TO EXPORT OF SERVICES :
Under new GST regime Exporter has two option for making export of Services
1. Payment of Integrated Good And Services Tax (IGST ) and then claim for refund.
2. Export made under the letter of Undertaking or Submission of bond with Bank Guarantee before making Export.
i) Export under Letter of Undertaking Following conditions need to be satisfy :
As per Notification No. 16/2017 Central Tax read with Circular No. 4 /2017 dated 7 July 2017 has been issued by the Government to provide clarity on certain issues in respect of submission of bond or Letter of Undertaking (LuT).
IN RESPECT OF LETTER OF UNDERTAKING
Ø Persons eligible to submit LuT – Following registered persons shall be eligible for submission of Letter of Undertaking in place of bond who intends to supply goods or services for export without payment of integrated tax:-
⇒ ·a status holder as specified in paragraph 5 of the Foreign Trade Policy 2015-2020; or
⇒ ·who has received the due foreign inward remittances amounting to a minimum of 10% of the export turnover, which shall not be less than INR 1 crore, in the preceding financial year.
It is further provided that such persons should not be prosecuted for any offence under the CGST Act, 2017 or under any of the existing laws in case where the amount of tax evaded exceeds INR 250 lakhs.
Manner of furnishing LuT – LuT shall be furnished in duplicate for a financial year in the FORM GST RFD-11 Along with below Mentioned Documents.
1. Form RFD-11
2. Letter of Undertaking on Non Judicial stamp paper
3. Board Resolution for authorized person of the company
4. Undertaking of no prosecution or no offence under CGST and any other earlier Law.
5. CA Certificate certifying Turnover and foreign remittance received during previous year along with BRC’s copies.
6. GSTIN Certificate of the company
7. Pan Card of company
8. IEC code certificate of company
9. Pan and address Proof of Authorised signatory.
10. ID and Address proof of witness
11. Copy of BRC and Foreign Currency Bank a/c s evidence of realization of export proceeds.
Validity of LuT – LuT will be valid for 12 months. If the exporter fails to comply with the conditions of the LuT, he may be asked to furnish a bond.
Jurisdictional Authority for LuT – LuT shall be accepted by the Deputy Commissioner having jurisdiction over the principal place of business of the exporter.
IN RESPECT OF BOND
Persons eligible to submit bond – Exporters, other than those who are eligible to export under LuT as mentioned above, would submit bond.
Manner of furnishing bond – The bond shall be furnished on non-judicial stamp paper of the value as applicable in the State in which bond is being furnished.
Type and value of Bond – The exporters shall furnish a running bond. The bond would cover the amount of tax involved in the export based on estimated tax liability as assessed by the exporter himself. The exporter shall ensure that the outstanding tax liability on exports is within the bond amount. In case the bond amount is insufficient to cover the tax liability in yet to be completed exports, the exporter shall furnish a fresh bond to cover such liability.
Bank guarantee – Form RFD-11 under rule 96A of CGST Rules, requires furnishing a bank guarantee with bond. It is clarified that the jurisdictional Commissioner may decide about the amount of bank guarantee depending upon the track record of the exporter. If Commissioner is satisfied with the track record of an exporter then furnishing of bond without bank guarantee would suffice. In any case the bank guarantee should normally not exceed 15% of the bond amount.
Jurisdictional Authority for Bond – Bond shall be accepted by the Assistant Commissioner having jurisdiction over the principal place of business of the exporter.
Document submitted in case exporter furnishes Bond
1. FORM GST RFD-11 with details of Bank Guarantee
2. Bank Guarantee
3. Letter of Authorization for Authorized Signatory
4. Photo Identity Proof of Authorized Signatory
5. GSTIN Certificate of the company
6. Pan Card of company
7. Address Proof And Pan Card Of Witness
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