Meaning and Definitions:

♦ Customs frontiers of India means the limits of a customs area  as  defined  in section 2 of the Customs Act, 1962 [Section 2(4)].

♦ Customs area means the area of a customs station or a warehouse and includes any area in which imported goods or export goods are ordinarily kept before clearance by Customs Authorities [Section 2(11) of the Customs Act, 1962].

♦ Customs station means any customs port, customs airport, international courier terminal, foreign post office  or  land  customs  station [Section 2(13) of the Customs Act,1962].

♦ Deemed exports means such supplies of goods as may be notified under section 147 [Section 2(39) of the CGST Act].

♦ Export of goods with its grammatical variations and cognate expressions, means taking goods out of India to a place outside India [Section 2(5)].

♦ Export of services means the supply of any service when,–

(i) the supplier of service is located in India;

(ii) the recipient of service is located outside India;

(iii) the place of supply of service is outside India;

(iv) the payment for such service has been received by the supplier of  service in convertible foreign exchange or in Indian rupees wherever permitted by the Reserve Bank of India; and

(v) 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 [Section 2(6)].

♦ Fixed establishment means a place other than the place of business which is characterized by a sufficient degree of permanence and suitable structure in terms of human and technical resources to supply services, or to receive and use services for its own needs [Section 2(7)].

♦ India means the territory of India as referred to in article 1  of  the Constitution, its territorial waters, seabed and sub-soil underlying such waters, continental shelf, exclusive economic zone or any  other  maritime zone as referred to in the Territorial Waters, Continental Shelf, Exclusive Economic Zone and other Maritime Zones Act, 1976, and  the  air  space  above its territory and territorial waters [Section 2(56) of the CGST Act].

♦ Input tax in relation to a registered person, means the central tax, State tax, integrated tax or Union territory tax charged on any supply of goods or services or both made to him and includes—

(a) the integrated goods and services tax charged on import of goods;

(b) the tax payable under the provisions of sub-sections (3) and (4) of section 9;

(c) the tax payable under the provisions of sub-sections (3) and (4) of section 5 of the IGST Act;

(d) the tax payable under the provisions of sub-sections (3) and (4) of section 9 of the respective State Goods and Services Tax Act; or

(e) the tax payable under the provisions of sub-sections (3) and (4) of section 7 of the Union Territory Goods and Services Tax Act,

but does not include the tax paid under the composition levy [Section 2(62) of the CGST Act].

♦ Intermediary means a broker, an agent or any other person, by  whatever name called, who arranges or facilitates the supply of goods or services or both, or securities, between two or more persons, but does not include  a person who supplies such goods or services or both or securities on his own account [Section 2(13)].

♦ Non-taxable online recipient means any Government, local authority, governmental authority, an individual or any other person not registered and receiving online information and data base access or retrieval services in relation to any purpose other than commerce, industry or any other business or profession, located in taxable territory.

Explanation–For the purposes of this clause, the expression “governmental authority” means an authority or a board or any other body –

(i) setup by an Act of Parliament or a State Legislature; or

established by any Government with nine type rcent or more participation by way of equity or control, to carry out any function entrusted to a Panchayat under article 243 Gor to a municipality under article 243W of the Constitution [Section 2(16)].

Location of the recipient of services means:

(A) where a supply is received at a place of business for which registration has been obtained, the location of such place of business;

(b) where a supply is received at a place other than the place of business for which registration has been obtained, that is to say, a fixed establishment elsewhere, the location of such fixed establishment;

(c) where a supply is received at more than one establishment, whether the place of business or fixed establishment, the location of the establishment most directly concerned with the receipt of the supply; and

(d) in absence of such places, the location of the usual place of residence of the recipient [Section 2(14)].

Location of the supplier of services means:

(a) where a supply is made from a place of business for which registration has  been obtained, the location of such place of business;

(b) where a supply is made from a place other than the place of  business  for which registration has been obtained, that is to say, a fixed establishment elsewhere, the location of such fixed establishment;

(c) where a supply is made from more than one establishment, whether the place of business or fixed establishment, the location of the establishment most directly concerned with the provision of the supply;and

(d) in absence of such places, the location of the usual place of residence of the supplier [Section2(15)].

♦ Online information and database access or retrieval services means services whose delivery is mediated by information technology over the internet or an electronic network and the nature of  which  renders  their  supply essentially automated and involving minimal human intervention and impossible to ensure in the absence of information technology and includes electronic services suchas,–

(i) advertising on the internet;

(ii) providing cloud services;

(iii) provision of e-books, movie, music, software and other intangibles through telecommunication networks or internet;

(iv) providing data or information, retrievable or otherwise, to any person in electronic form through a computer network;

(v) online supplies of digital content (movies, television shows, music and the like);

(vi) digital data storage;and

(vii) online gaming [Section 2(17)].

♦ Place of business includes-

(a) a place from where the business is ordinarily carried on, and includes a warehouse, a godown or any other place where a taxable person store-sh is goods, supplies or receives goods or services or both; or

(b) a place where a taxable person maintain-sh is books of account;or

(c) a place where a taxable person is engaged in business through an agent, by what ever name called [Section 2(85) of the CGST Act]

♦ Recipient of supply of goods or services or both, means—

  • where a consideration is payable for the supply of goods or services or both, the person who is liable to pay that consideration;
  • where no consideration is payable for the supply of goods, the person to whom the goods are delivered or made available, or to whom possession or use of the goods is given or made available; and
  • where no consideration is payable for the supply of a service, the person to whom the service isrendered,

and any reference to a person to whom a supply is made shall be construed as a reference to the recipient of the supply and shall include an agent actingas such on behalf of the recipient in relation to the goods or services or both supplied [Section 2(93) of the CGSTAct].

♦ Supplier in relation to any goods or services or both, shall mean the person supplying the said goods or services or both and shall include an agentacting as such on behalf of such supplierin relation to the goods or services or both supplied [Section 2(105) of the CGSTAct.

“GST on Exports

One of the fundamental principle to make exports competitive in the international market is that taxes should not be exported. Hence, export to destinations outside India as well as supplies to SEZ have been ‘zero-rated’, i.e. the goods or services exported are relieved of GST levied upon them either at the input stage or at the final product stage by way of refund of taxes paid. Thus, it can be seen that supply to SEZ unit/developer is treated at par with physical exports.

Supplies made for export through merchant exporters are taxed at 0.1% with ITC benefit. Supplies of goods from Domestic Tariff Area (DTA) to EOU/ Electronic Hardware Technology Park (EHTP) Unit/ Software Technology Park (STP) Unit/ Bio-Technology Parks (BTP) Unit are considered as ‘deemed exports’ and are allowed some of the benefits that actual export enjoy.

Supply of goods and services having place of supply in Nepal or Bhutan, against payment in Indian Rupees is exempted even if the payment is received in Indian Currency looking at the business practices and trends i.e. export of goods and services to Nepal and Bhutan will be treated as normal exports.

1) Statutory Provisions:

a) How are Exports treated under GST Law?

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

    • Inter-State supply (7(5) IGST act) and covered under the IGST Act. Export is treated as Inter-state supply under GST and IGST is charge on export.
    • zero rated supply (Sec.16 (1) IGST act) i.e. the goods or services exported shall be relieved of GST levied upon them either at the input stage or at the final product stage.

GST will not be levied in any Kind of Exports of Goods or Services.

b) What is Zero rated Supply? – Sec.16 (1) IGST ACT

(1) “zero rated supply” means any of the following supplies of goods or services or both, namely:–

(a) Export of goods or services or both; or

(b) Supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit.

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.

In other words, as it has been well discussed in section 17(2) of the CGST Act that input tax credit will not be available in respect of supplies that have a ‘0%’ rate of tax. However, this disqualification does not apply to zero-rated supplies covered by this section.

These provisions of zero-rated supplies are introduced in the statute on the basis of the prevalent Central Excise and Service Tax laws. It is widely believed that introduction of this provision will alleviate the difficulty of a supplier who exempts goods or services or both in terms of export competitiveness.

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.

2) Ways to Claim refund:

According to Section 16(3) of the IGST Act, person making a Zero Rated Supply can opt for any of the following two options:

a) To supply goods or services without paying IGST and then claim a refund of unutilised ITC under a bond or by furnishing a Letter of Undertaking (LUT) in Form RFD-11 to the jurisdictional officer binding himself to pay the tax due along with the interest specified under sub-section (1) of section 50 within a period of –

    • fifteen days after the expiry of three months from the date of issue of the invoice for export, if the goods are not exported out of India
    • fifteen days after the expiry of one 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; or

b) To supply goods or services on payment of IGST and then claim the GST refunds of such tax paid.

The process for claiming a refund for supply of goods differ from process of refund in case of supply of services:

a) Process for Goods: The process for manufacturers who supplying the goods are simpler. The shipping bill of the goods will itself be treated as an application for refund. The manufacturers will get refund directly into their bank account and no separate application is required in this process. Further, the GST authorities have declared that the refund will be credited directly to the bank account of the exporter registered with the customs even if it is different from the applicant’s bank account mentioned in his registration particulars. This method has been adapted by the GST authorities to ensure smooth processing and payment of refunds.

b) Process for Services: Service exporters cannot get direct GST refunds into their bank account. To get a refund, the service exporter must file certain documents with the jurisdictional GST officer of the company. The differentiation is made because services are intangible and there is no documentation trail of exports. Export of goods has a clear trail with customs, shipping/transport and other bills being shared with the Government.

Documents required by the Exporter of the Services to be filed for getting a GST refund:

a) A covering Letter

b) Bank Realization Certificates or Foreign Inward Remittance Certificates

c) Export Invoices

d) Form GSTR 3B and GSTR 1

e) Application for Refund in the Form GST RFD 01

f) Cancelled cheque

g) If GST refunds claims exceed ₹2 lakhs (₹200,000 or ~$3,000) per quarter a certificate from a Chartered Accountant/Cost Accountant

All the above-mentioned documents are all mandatory, GST refund cannot be claimed without these documents.

3) Time Limit for Claiming Refund:

a) For Goods: a claim must be filed within, expiry of 2 years from the date of exports.

b) For Services: the relevant date is either:

    • The date of completion of services, or
    • The date of receipt of the advance, in cases where, the advance has been received prior to the date of issue of invoice. Typically therefore, if a service exporter receives an advances, it is beneficial for him to apply, at that stage itself.

c) Delay in granting refund by the department:

    • Cases beyond sixty days will get an interest at the notified rate not exceeding 6% till the date of refund if the refund has been sanctioned.
    • Cases which may be adjudicated by Appellate or Adjudicating authority interest shall be paid at the notified rates not exceeding 9% till the date of refund.

“Deemed Export

Deemed exports refers to supplies of goods manufactured in India (and not services) which are notified as deemed exports under section 147 of the CGST Act. Such supplies do not leave India and the payment for the same is received either in Indian rupees or in convertible foreign exchange.

Following categories of supply of goods have been notified as deemed exports by the Government vide Notification No. 48/2017 CT dated 18.10.2017:

a) Supply of goods by a registered person against Advance Authorisation – If exports have already been made after availing ITC on inputs used in the manufacture of such exports, the goods so supplied should be used in the manufacture and supply of taxable goods (other than nil rated or fully exempted goods) and a certificate to this effect from a Chartered Accountant should be submitted to the jurisdictional Commissioner of GST or any other officer authorised by him within 6 months of supply.

b) Supply of capital goods by a registered person against Export Promotion Capital Goods Authorisation (EPCG).

c) Supply of goods by a registered person to Export Oriented Unit (EOU).

d) Supply of gold by a bank or Public sector Undertaking specified in Notification 50/2017 Cus dated 30.06.2017 (as amended) against Advance Authorisation.

Note:

> Advance Authorisation: means an authorisation issued by the Director General of Foreign Trade under Chapter 4 of the Foreign Trade Policy 2015-20 for import or domestic procurement of inputs for physical exports.

> EPCG: means an authorisation issued by the Director General of Foreign Trade under Chapter 5 of the Foreign Trade Policy 2015-20 for import ofcapital goods for physical exports.

> EOU: means an EOU or Electronic Hardware Technology Park Unit or Software Technology Park Unit or Bio-Technology Park Unit approved in accordance with the provisions of Chapter 6 of the Foreign Trade Policy, 2015-20

1) Tax Treatment:

Regular export are zero-rated supplies i.e. no GST is applicable and also GST paid for exports will be allowed as a refund. But deemed exports are not zero-rated supplies and therefore GST is to be paid on them. Then what will be the meaning for considering it as deemed export? In case of deemed exports, although GST is payable, the tax paid can be claimed as refund either by the supplier or by the recipient.

2) Who can file refund application in case of Deemed Exports supplies:

a) By recipient: If the supplier has not taken the refund then the recipient can claim the refund of input tax credit availed in respect of input and input services used in making the zero-rated supply of goods or services or both.

b) By Supplier: He needs to get an undertaking from the recipient that he has not availed the input tax credit on such supplies and supplier can take the refund.

3) Time Limit for filing refund claim:

Application in Form GST RFD-01is to be filed within 2 years from the date on which return relating to such deemed export supplies is furnished. A statement containing number and details of invoices is to be furnished along with Form GST RFD-01.

4) Procedure in case of supplies to EOU/EHTP/STP/BTP Units:

> The recipient EOU / EHTP / STP / BTP unit shall give prior intimation in a prescribed proforma in “Form–A” (appended herewith) bearing a running serial number containing the goods to be procured, as pre-approved by the Development Commissioner and the details of the supplier before such deemed export supplies are made. The said intimation shall be given to-

> The registered supplier

> The jurisdictional GST officer in charge of such registered supplier

> It’s jurisdictional GST officer

> The registered supplier thereafter will supply goods under tax invoice to the recipient EOU / EHTP / STP / BTP unit.

> On receipt of such supplies, the EOU / EHTP / STP / BTP unit shall endorse the tax invoice and send a copy of the endorsed tax invoice to-

> The registered supplier

> The jurisdictional GST officer in charge of such registered supplier

> It’s jurisdictional GST officer

> The endorsed tax invoice will be considered as proof of deemed export supplies by the registered person to EOU / EHTP / STP / BTP unit.

> The recipient EOU / EHTP / STP / BTP unit shall maintain records of such deemed export supplies in digital form, based upon data elements contained in “Form-B” (appended herewith). The software for maintenance of digital records shall incorporate the feature of the audit trail. While the data elements contained in the Form-B are mandatory, the recipient units will be free to add or continue with any additional data fields, as per their commercial requirements. All recipient units are required to enter data accurately and immediately upon the goods being received in, utilized by or removed from the said unit.

> The digital records should be kept updated, accurate, complete and available at the said unit at all times for verification by the proper officer, whenever required. A digital copy of Form – B containing transactions for the month, shall be provided to the jurisdictional GST officer, each month (by the 10th of the month) in a CD or Pen drive, as convenient to the said unit.

> The above procedure and safeguards are in addition to the terms and conditions to be adhered to by an EOU / EHTP / STP / BTP unit in terms of the Foreign Trade Policy, 2015-20 and the duty exemption notification being availed by such unit.

“Supply to Merchant Exporter

There is no issuance of CT-1 form which enables merchant exporters to purchase goods from a manufacturer without payment of GST.

The transaction between a manufacturer (‘supplier’) and a merchant exporter (‘recipient’) is in the nature of supply and same is liable to GST as any other normal taxable supply.

The GST Council in its 22nd meeting had decided that merchant exporter can pay a nominal GST of 0.1 percent for procuring goods from a domestic supplier for export.

The supplier who supplies goods at the concessional rate will be eligible for refundof ITC on account of inverted tax structure as per the provisions of section 54(3)(ii) of the CGST Act. However, it may be noted that the exporter of such goods can export the goods only under LUT / bond and cannot export on payment ofIGST.

1) Rates of GST:

GST Type Rate (in %) Relevant Notification No.
CGST 0.05 40/2017 – Central Tax (Rate)
SGST 0.05 See Note
IGST 0.10 41/2017- Integrated Tax (Rate)

Note: This is subject issuance of notification under respective State GST Acts.

Further, rate of GST in case of services provided to merchant exporter will be the normal rates as prescribed under schedule. Supplier cannot charge concessional rate in case of supply of service to merchant exporter.

2) Procedure:

The procedure for supplying goods to a merchant exporter shall be as follows:

Step 1: Placing an order by a merchant exporter and furnishing copy thereof to the Department

a) Merchant exporter shall place an order on registered supplier for procuring goods at concessional rate.

b) Copy of the order shall also be provided to the jurisdictional tax officer of the registered supplier.

Step 2: For exporting the goods, the recipient shall

a) directly move the said goods from supplier’s place to the port/inland container depot (ICD)/airport/land custom station (LCD) from where the said goods are to be exported; or

b) directly move the said goods to a registered warehouse from where the said goods shall be move to the port/inland container depot (ICD)/airport/land custom station (LCD) from where the goods are to be exported.

c) Option to aggregate the inward supplies:

> If merchant exporter intends to aggregate supplies from multiple suppliers and then export, he can move goods to registered warehouse and thereafter to the port/ICD/airport or LCD and then export therefrom.

> In this case merchant exporter shall endorse receipt of goods on the tax invoice and also obtain an acknowledgement of receipt of goods from the warehouse operator.

> The endorsed tax invoice and the acknowledgement of the warehouse operator shall be provided to the registered supplier as well as to the jurisdictional tax officer of such supplier.

Step 3: Post-export compliance:

Once the goods are exported, merchant exporter shall provide following documents to the supplier and the jurisdictional tax officer of the supplier:

a) Copy of shipping bill/ Bill of export (incorporating supplier’s GSTIN)

b) Tax invoice provided by supplier

c) Export General Manifest/ Export report

3) Conditions for availing benefit of concessional rate of GST on Supply to Merchant Exporter:

a) Supplier shall supply goods under a tax invoice.

b) Goods must be exported within a period of 90 days from the date of issue of tax invoice by the supplier. The exemption would not be available to the supplier if the merchant exporter fails to export the said goods within a period of 90 days from the date of issue of tax invoice.

c) Merchant exporter shall indicate the GSTIN of the supplier and tax invoice number issued by the supplier in the shipping bill/ bill of export.

d) Merchant exporter must be registered with an Export Promotion Council or a Commodity Board recognized by the Department of Commerce.

4) Export with Payment of IGST not Allowed

According to Notification No. 40/2017-Central Tax (Rate), 23rd October, 2017 and Notification No. 41/2017–Integrated Tax (Rate), 23rd October, 2017, notification No. 3/2018-Central Tax, dated 23.01.2018 and Circular No. 37/11/2018-GST; Dated the 15th March, 2018 the benefit of procuring at Concessional Rate of 0.1% allowed to Merchant Exporters subject to condition that the Merchant Exporter of such goods can Export the goods only under LUT / bond and cannot export on payment of integrated tax per Rule 96(10) of the CGST Rules.

5) Refund Scenarios:

a) In the First Scenario, Concessional Rate of GST availed. The Merchant Exporter after Export under LUT / Bond has to apply for ITC Refund.

b) In the Second Scenario, Concessional Rate of GST availed. The Supplier can apply for Refund of ITC as Inverted Tax Structure.

c) In the Third Scenario, Supplies are made on Charging Normal Tax. The Merchant Exporter after Export under LUT / Bond has to apply for ITC Refund.

“Important Points with respect to Refund”

1) Calculation of Maximum Refund Amount under Inverted Duty Rate Structure [Rule 89(5)]

a) Maximum Refund Amount = {(Turnover of inverted rated supply of goods and services) x Net ITC ÷ Adjusted Total Turnover} – tax payable on such inverted rated supply of goods and services.

Explanation:

    • ‘Net ITC’ shall mean input tax credit availed on inputs during the relevant period other than the input tax credit availed for which refund is claimed under sub-rules (4A) or (4B) or both; and
    • In case of Inverted duty rate structure, refund is allowed only against inputs and amount of input service has to be deducted from total input tax credit. Further no refund is allowed against input tax credit on capital goods.
    • ‘Adjusted Total turnover’ shall have the same meaning as assigned to it in rule 89 (4).

As per Rule 89(4)”Adjusted Total turnover” means the turnover in a State or a Union territory, as defined under clause (112) of section 2, excluding-

      • the value of exempt supplies other than zero-rated supplies and
      • the turnover of supplies in respect of which refund is claimed under sub rules (4A) or (4B) or both, if any, during the relevant period.

2) Rule 89(4A): Under Rule 89(4A), refund is allowed to the recipient of supplies under deemed exports (i.e. advance authorization or EPCG license or supply to EOU/EHTP/STP/BTP) for ITC on other inputs and input services received other than supplies received under deemed export and used for making zero rated supplies. However, in such cases no refund is allowed on exports against payment of IGST.

3) Rule 89(4B): under Rule 89(4B), refund is allowed to the recipient of supplies (exporter) receiving inputs under:

a) concessional rate of tax or

b) importing without payment of IGST under advance authorization

and utilizes the inputs received as well as other inputs and input services in furtherance of zero rated supplies.

This refund is allowed on credit available on inputs or input services on which concessional tax payment has been done and also in respect of other inputs and input services utilized in export of goods.

Clarification on furnishing Bond/LUT

Circular No. 08/08/2017 GST dated 04.10.2017 as amended vide Circular No. 40/14/2018  GST  dated  06.04.2018  &  Circular  No.  88/07/2019  GST  dated 01.02.2019   has   clarified   the   following   with   regard   to   furnishing   of bond/LUT for export without payment of tax:

a) Validity of LUT: The LUT shall be valid for the whole financial year in which it is However, in case the goods are  not  exported within the time specified in sub-rule (1) of rule 96A of the CGST Rules (as given in the table above) and the registered person fails to pay the amount mentioned in the said sub-rule,  the  facility  of  export  under LUT will be deemed to have  been  withdrawn.  If the amount mentioned in the said sub-rule is paid subsequently, the facility of export under LUT shall be restored. As a result, exports, during the period from when the facility to export under LUT is withdrawn till the time the same is restored, shall be either on payment of the applicable IGST or under bond with bank guarantee.

b) Form for bond/LUT: The registered person (exporters) shall fill the relevant form on the common portal. An LUT shall be deemed to be accepted as soon as an acknowledgement for the same, bearing the Application Reference Number (ARN), is generated online.

c) Documents for LUT: No document needs to be physically submitted to the jurisdictional office for acceptance of LUT.

d) Acceptance of LUT/bond: A LUT shall be deemed to have been accepted as soon as an acknowledgement for the same, bearing the Application Reference Number (ARN), is generated online. If it is discovered that an exporter whose LUT has been so accepted, was ineligible to furnish a LUT in place of bond, then the exporter’s LUT will be liable for In case of rejection, the LUT shall be deemed to have been rejected abinitio.

e) Bank guarantee: Since the facility of export under LUT has been extended to all registered persons, bond will be required to be furnished by those persons who have been prosecuted for cases involving an amount exceeding ₹ 250 A bond, in all cases, shall be accompanied by a bank guarantee of 15% of the bond amount.

f) Clarification regarding running bond: The exporters shall furnish a running bond where the bond amount would cover the amount of self-assessed estimated tax liability on the export. The exporter shall ensure that the outstanding integrated tax liability on exports is within the bond In case the bond amount is insufficient to cover the said liability in yet to be completed exports, the exporter shall furnish a fresh bond to cover such liability. The onus of maintaining the debit / credit entries of integrated tax in the running bond will lie with the exporter. The record of such entries shall be furnished to the Central tax officer as and when required.

g) Sealing by officers: Till mandatory self-sealing is operationalized, sealing of containers, wherever required to be carried out under the supervision of the officer, shall be done under the supervision of the central excise officer having jurisdiction over the place of business where the sealing is required to be A copy of the sealing report would be forwarded to the Deputy/Assistant Commissioner having jurisdiction over the principal place of business.

h) Realization of export proceeds in Indian Rupee:Para A(v) Part-I of RBI Master Circular   14/2015-16, dated 1st July,  2015  (updated  as on 5th November, 2015) states that  “there  is  no  restriction  on invoicing of export contracts in Indian Rupees in terms of the Rules, Regulations, Notifications and Directions framed under the Foreign Exchange Management Act, 1999. Further, in terms of Para 2.52 of the Foreign Trade Policy (2015-2020),all export contract sand invoices shall be denominated either in freely convertible currency or  Indian rupees   but  export  proceeds   shall  be  realized   in  freely   convertible currency.   However, export proceeds against specific exports may also be realized in rupees, provided it is through a freely convertible Vostro account of a non-resident bank situated in any country other than a member country of Asian  Clearing  Union  (ACU)  or  Nepal  or  Bhutan”. Further Section 2(6) of IGST Act, 2017 allows realization of export proceeds of services in INR wherever allowed by RBI. Accordingly, it is clarified that the acceptance of LUT for supplies of goods or services to countries outside India or SEZ developer or SEZ unit will be permissible irrespective of whether the payments are made in Indian currency or convertible foreign exchange as long as they are in accordance with the applicable RBI guidelines.

i) Jurisdictional officer: In exercise of the powers conferred by sub- section (3) of section 5 of the CGST Act, it is hereby stated that the LUT/Bond shall be accepted by the jurisdictional Deputy/Assistant Commissioner having jurisdiction over the principal place of business of the The exporter is at liberty to furnish the LUT/bond before either the Central Tax Authority or the State Tax Authority till the administrative mechanism for assigning of taxpayers to the respective authority is implemented.

Author Bio

Qualification: CA in Practice
Company: KVSS & CO.
Location: Kalyan, Thane, Maharashtra, IN
Member Since: 08 Apr 2020 | Total Posts: 4

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One Comment

  1. Manish mahale says:

    Dear sir
    Very useful article..
    I just want to know ,in case of merchant exporter received contract from government of India for export of services ,for which they get the payment of contract in Indian currencies , in that case can we demand for special permission from reserve bank of India .

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