Exports & Deemed Exports – GST

Treatment of Exports of Goods 

Under the GST Law, export of goods or services has been treated as: 

1. Inter-State supply and covered under the Integrated Goods and Services Tax Act (IGST Act).

2. Zero Rated Supply i.e. the goods or services exported shall be relieved of GST levied upon them either at the input stage or at the final stage.  

Exports of Goods – Compliance  

Under new Indirect tax regime, the procedures relating to exports have been simplified to the greater extent.

Payment of GST 

The goods and services can be exported either on payment of Integrated GST or under bond or Letter of Undertaking (LOU) without payment of IGST.

In case of goods exported on payment of integrated GST, the exporter can claim the refund after the goods have been exported.

In case of goods and services exported under bond or LUT, the exporter can claim the refund of accumulated Input Tax Credit on account of export.

Documentation           

In case of goods, the Shipping Bill is the only document required to be filed with the Customs for making exports. The requirement of filing the ARE 1/ARE 2 has been abolished.

Self-Sealing & Self Certification 

An exporter who desirous of availing the self- sealing & self – certification, shall inform the concerned Officer at least 15 days in advance before the first movement of a consignment from his factory or warehouse. Once the permission is granted, the exporter shall furnish the only intimation to the jurisdictional Superintendent or Customs each time self-sealing is carried out at approved premises.

Self-Sealing permission once given by the concerned officer shall be valid for export at all the customs stations. The customs formation granting the self-sealing permission shall circulate the permission along with GSTIN of the exporter to all Custom Houses concerned.

Transport document for movement of the self-sealed container by an exporter from factory or warehouse shall be same as the transport document prescribed under the GST Laws. In the case of an exporter who is not a GST registrant, Way Bill or Lorry Receipt shall be the transport document.

1. The concept of merchant or manufacturer exporter would become irrelevant under the GST regime. Further, Merchant exporter (Trader) allowed procuring goods from a domestic supplier on payment of GST @ 0.1%.

2. Exporters holding Advanced Authorization / EPCG and EOU’s are allowed to import/procure goods from domestic supplier without payment of GST;

3. However, said reliefs are in temporary in nature.  It is proposed to introduce “E-Wallet “as permanent relief w.e.f 1st April 2018. Under “E-Wallet Relief” notional amount will be credited for exporter as an advance refund for payment of GST. Later, this advance shall be adjusted with balance refund due after export.

4. To compensate  the loss incurred on sale of duty credit scrips such as MEIS & SEIS, the GST on sale/purchase, is reduced from 5% to 0%;

5. Specified banks and Public Sector Units (PSUs) are being allowed to import Gold without payment of IGST.

The exporter shall seal the container with the tamper-proof electronic seal of standard specification. Before sealing the container, the exporter shall feed the data such as –

1. The name of the exporter,
2. IEC code,
3. GSTIN number,
4. Description of the goods,
5. Tax invoice number, etc.
   

The exporter intending to clear export goods on self-clearance shall file the Shipping Bill under digital signature.

Exemption of Duties 

With effective from 1^st July 2017, the exemption of duties available under Advance authorization scheme, EPCG scheme and duty credit scrips such as MEIS & SEIS schemes shall be restricted only to Basic Customs Duty, Safeguard Duty, Transitional Product-Specific Safeguard Duty and Anti-dumping Duty in respect of goods leviable to IGST.

Refund Mechanism 

In case of refund of tax on inputs used in exports 

 In the case of refund of IGST paid on exports: 

Upon receipt of information regarding furnishing of valid return in Form GSTR-3 by the exporter from the common portal, the Customs shall process the claim for refund and an amount equal to the IGST paid in respect of each shipping bill shall be credited to the bank account of the exporter.

Latest Developments – As on 24^th October, 2017 

GST Network (GSTN) has from 10^th October 2017 started issuing refunds to exporters for Integrated GST they paid for the month of July, after matching GSTR-3B and GSTR-1.

For August and September, while the initial return GSTR-3B has already been filed, the final return GSTR-1 has not yet been filed.  A separate online Application (App) for claiming Integrated GST (IGST) refunds for August and September will be made available on GSTN portal from 4th week of October.

For the month of July & August, estimated Rs. 67,000 crores has accumulated as the Integrated GST (IGST), of which only about Rs. 5,000-10,000 crores will be due as refunds to exporters.

Deemed Export 

Under section 147, the Government may, on the recommendations of the Council, notify certain supplies of goods manufactured in India 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.

The Central Government, vide Notification No. 48/2017 – Central Tax dated 18^th October 2017, notified certain supplies as deemed export, namely;

1. Supply of goods by a registered person against Advance Authorization.
2. Supply of capital goods by a registered person against Export Promotion Capital Goods Authorization.
3. Supply of goods by a registered person to Export Oriented Unit.
4. Supply of gold by a bank or Public Sector Undertaking specified in the notification No. 50/2017-Customs, dated the 30^th June, 2017 against Advance Authorization.
   

For refund of tax, the application in FORM GST RFD-01, to be filed by the supplier of deemed export supplies in case when the recipient does not avail the ITC on such supplies and furnishes an undertaking. Notification No. 47/2017-Central Tax dated 18^th October 2017.

Export Oriented Units under GST Regime 

EOU will be treated like any other supplier and all the provisions of the GST Laws will apply.

Benefits 

1. The duty-free imports will be restricted to Basic Customs Duty.

2. Exemption from the additional duties of Customs, if any, under section 3(1), 3(3) and 3(5) of the Customs Tariff Act, 1975

3. Exemption from Central Excise duty for goods specified in the Fourth Schedule to the Central Excise Act.

However, IGST or CGST plus SGST will be payable by the suppliers who make supplies to the EOU. The EOU will be eligible to take Input Tax Credit of the said GST paid by its suppliers.

Supply of goods from one EOU to another EOU (i.e. Inter – Unit transfer) will be treated as any other supply.                                                                             

Re-Export of Imported Goods 

No amendments have been made to the drawback provisions (Section 74 or Section 75) under Customs Act 1962 in the GST regime. Hence, the drawback scheme will continue in terms of both sections 74 and section 75. Option of All Industry Rate (AIR) as well as Brand Rate under Section 75 shall also continue.

Taxes paid at the time of importation of goods, Drawback of the same will be granted.

• Drawback of Basic Customs Duty,
• Additional Duty of Customs (CVD),
• Special Additional Duty (SAD),

paid on the goods imported prior to 1^st July 2017 will be paid even if the re-export is made after 1st July 2017.

Similarly, in respect of the goods imported after 1st July 2017, Basic Customs Duty, Integrated GST, Compensation Cess will be paid and Drawback of all of these would be paid on re-export of such imported goods.

Imports by SEZs 

Authorised operations in connection with SEZs shall be exempted from payment of Integrated GST. Hence, there is no change in operation of the SEZ scheme.

However, if drawback is claimed by Domestic Tariff Are (DTA) supplier, the claim needs to be filed with the jurisdictional Customs Authorities.

Relief Package Announced in 22^nd GST Council Meeting held on 6^th October 2017 

1. The concept of merchant or manufacturer exporter would become irrelevant under the GST regime. Further, Merchant exporter (Trader) allowed procuring goods from a domestic supplier on payment of GST @ 0.1%.

2. Exporters holding Advanced Authorization / EPCG and EOU’s are allowed to import/procure goods from domestic supplier without payment of GST;

3. However, said reliefs are in temporary in nature.  It is proposed to introduce “E-Wallet “as permanent relief w.e.f 1st April 2018. Under “E-Wallet Relief” notional amount will be credited for exporter as an advance refund for payment of GST. Later, this advance shall be adjusted with balance refund due after export.

4. To compensate  the loss incurred on sale of duty credit scrips such as MEIS & SEIS, the GST on sale/purchase, is reduced from 5% to 0%;

5. Specified banks and Public Sector Units (PSUs) are being allowed to import Gold without payment of IGST.

 The author is a budding tax law professional and can be reached at shreetaxchambers@bsnl.in