GST on Third Party Exports

‘Third-party exports’ means exports made by an exporter or manufacturer on behalf of another exporter(s). In such cases, shipping bills shall indicate the name of both the exporter/ manufacturer and exporter(s). The applicable GST rate for third party exports are as follows:-

-For intra-State supply, GST should be applied at the rate of 0.05 % vide notification no. 40/2017 dated 23.10.2017·

-For inter-State supply, GST should be applied at the rate of 0.1 % vide notification no. 41/2017 dated 23.10.2017 Understanding of Intra-state supply and Inter-state supply:

What is an Intrastate Supply?

Intra State supply of products or services occurs when the supplier’s location and the place of supply, i.e., the buyer’s location, are both in the same state. A vendor must collect both CGST and SGST from the customer in intra-state transactions.

What is an Interstate supply?

When the provider and the place of supply are in different states, this is referred to as inter-state supply.

Points to remember for Intra State Supply

• On every transaction of taxable supply of goods and services on an intra-state basis, the Central GST (CGST) and State GST (SGST) shall be imposed simultaneously.
• A seller must collect both the State Goods and Services Tax (SGST) and the Central Goods and Services Tax (CGST) from a buyer in Intra State Supply.
• The Central Goods and Services Tax (CGST) is to be placed with the federal government, while the State Goods and Services Tax (SGST) is to be deposited with the state government.
• The rates of GST would remain the same for the goods or services but the GST rate and the tax amount will be divided equally under two heads namely the SGST and CGST.

• Intra-State supply is applicable when the goods or/and services are supplied with in the same:

1. State

2. Union Territory

Point to remember for Inter-State Supply

• As per the GST Act, Interstate supply means the transportation of goods or services between the state and union territory.
• Before they reach the customs station, products delivered to India are frequently referred to as an Inter-State Supply.
• The Integrated GST (IGST) would be charged on every taxable supply of goods transaction & services provided on an interstate basis. It would also be based on the same price or value.
• Calculated in accordance with Section 15 of the CGST Law.
• Inter-state is applicable on the domestic supply means when the place of supplier and the place of supply are:

1. Two different states;

2. Two different regions under one Union Territory; or

3. State and a UT

• Inter-state supply also includes the goods or/and service supplied from or special economic zone (SEZ) or export-oriented unit (EOU).

Diagram of Intra-state and Inter-state

Conditions of GST under Third Party Exports for Intra-state supply and Inter-state supply: –

• the registered supplier shall supply the goods to the registered recipient on a tax invoice;
• the registered recipient shall export the said goods within a period of 90(ninety days) from the date of issue of a tax invoice by the registered supplier;
• the registered recipient shall indicate the Goods and Services Tax Identification Number of the registered supplier and the tax invoice number issued by the registered supplier in respect of the said goods in the shipping bill or bill of export, as the case may be;
• the registered recipient shall be registered with an Export Promotion Council or a Commodity Board recognised by the Department of Commerce;
• the registered recipient shall place an order on registered supplier for procuring goods at concessional rate and a copy of the same shall also be provided to the jurisdictional tax officer of the registered supplier;
• the registered recipient shall move the said goods from place of registered supplier –

(a) directly to the Port, Inland Container Deport, Airport or Land Customs Station from where the said goods are to be exported; or

(b) directly to a registered warehouse from where the said goods shall be move to the Port, Inland Container Deport, Airport or Land Customs Station from where the said goods are to be exported;

• if the registered recipient intends to aggregate supplies from multiple registered suppliers and then export, the goods from each registered supplier shall move to a registered warehouse and after aggregation, the registered recipient shall move goods to the Port, Inland Container Deport, Airport or Land Customs Station from where they shall be exported;
• the registered recipient shall endorse receipt of goods on the tax invoice and also obtain acknowledgement of receipt of goods in the registered warehouse from the warehouse operator and the endorsed tax invoice and the acknowledgment of the warehouse operator shall be provided to the registered supplier as well as to the jurisdictional tax officer of such supplier; and
• when goods have been exported, the registered recipient shall provide copy of shipping bill or bill of export containing details of Goods and Services Tax Identification Number (GSTIN) and tax invoice of the registered supplier along with proof of export general manifest or export report having been filed to the registered supplier as well as jurisdictional tax officer of such supplier.

The registered supplier shall not be eligible for the above-mentioned exemption if the registered recipient fails to export the said goods within a period of ninety days from the date of issue of tax invoice.