Export of Goods and GST

Export of goods means taking goods out of India to a place outside India. Export of goods regarded as zero rated supply under GST, meaning thereby there will be no burden of duties/taxes on exported goods at any stage of distributive chain starting from manufacturer stage to exporter stage. It is ensured by way of refund or duty drawback. Refund is available for unutilized input tax credit or GST paid on exported goods itself. Duty drawback is available in respect of duties and taxes paid on goods or services used for exported goods which is not under GST or credit is not available for the same such as central excise duties paid on petroleum product and GST paid on food, beverage, motor vehicle.

Mode of export of Goods

Option-I Without payment of integrated tax and claim refund of unutilized input tax credit; – (Export under Bond or LUT (Letter of Undertaking) or.

Option-II On payment of integrated tax and claim refund of such tax paid.

In option-I unutilized input tax credit to be claimed as refund, in option-II taxes paid on exported items itself to be claimed as refund.

What are the compliance for Option-I (Who is eligible for LUT)

Exporter have to furnish Bond with bank guarantee (Bank guaranteed is not required for member of carpet export promotion council) or LUT with jurisdiction GST authority. An exporter who has received a minimum foreign inward remittance of 10% of export turnover in the preceding financial year is eligible for availing the facility of LUT instead of bond provided that the amount received as foreign inward remittance is not less than Rs. one crore. Meaning thereby only such exporters are eligible to LUT facilities who have received a remittance of Rs. one crore or 10% of export turnover in the previous financial year, whichever is a higher amount.

Bonds are to be furnished on non-judicial stamp paper and running in nature with debit and credit facility, while LUTs are generally submitted on the letterhead containing signature and seal. Format of Bond and LUT is given under RFD-11.

Export & Invoice

Under GST rules, export invoice has to incorporate either “Supply meant for Export on Payment of IGST” or “Supply meant for Export under bond or LUT without payment of IGST”, Meaning thereby that exporter can export either under Bond/LUT (Without payment of IGST and claim refund of unutilized credit route) or on payment (payment and refund of GST on exported goods route).

Can Exporter have GST Invoice as well as Commercial Invoice

Exporter can issue separate invoices- for GST purposes and commercial purpose. Wherever Commercial Invoice is different from Export Tax Invoice, details of both have to be provided in the Shipping Bill. Export Tax invoice to be used for refund, return and GST assessment and commercial invoice to be used for realization and communication with customer.

How to file the return in absence of shipping bill i.e. invoice is issued but shipping bill is yet to be field

If the shipping bill details are not available in the tax period in which invoice are issued, return (Table-6 of GSTR-1) to be field on the basis of invoice in hand, Table-6 will accept the information without detail of shipping bill. The same should be updated for corresponding shipping bill number through submission of information in Table-9 of GTSR-1 in the tax period in which detail of shipping bill is available. Such updation should be before claim of refund related to such invoice. The detail of shipping bill shall be furnished in 13 digits capturing port code (6 digit) followed by number of shipping bill 7 digit).

Export benefits under GST

Merchant export incentivasation scheme (MEIS) allow duty credit scrip ranging from 2% to 5% of FOB value of export. In pre GST regime such scrip was usable for payment of service tax, central excise duty, CVD, SAD, basic Customs duty. However post GST such scrip can be used for payment of only customs duty other than IGST, due to such restriction, rate of scrip is reduced in market. Further sale of scrip is classified as goods under GST having HSN is 4107 and rate of GST on sale MEIS scrip w.e.f September 29, 2017 is 5% and rate of GST from 01st July 2017 till September 29, 2017 was 12 %.

Export and Duty drawback

Central Government has revised All Industry Rates (AIRs) of Drawback vide Notification No. 89/2017-Customs (N.T.) dated 21.9.2017 which comes into force on 1.10.2017. Drawback is limited to incidence of duties of Customs on inputs used and remnant Central Excise Duty on specified petroleum products used for manufacture or processing of export goods. Revised rate of drawback and rate of merchandise export benefits on carpets are summarized as under:

Carpets and other textile floor coverings, knotted, whether or not made up :
Tariff Item Description of goods Drawback rate MEIS benefits
570101 Of Wool or fine animal hair 3.7% 5% of FOB value of export to all market.

57011000.

570102 Of Wool or fine animal hair containing 15% or more by weight of silk 3.7%
570103 Of Silk 9%
570104 Of Man Made Fibres 1.7%
570199 Of Others 1.9%
Carpets and other textile floor coverings, woven, not tufted or flocked, whether or not made up, including “Kelem”, “Schumacks”, “Karamanie” and similar hand-woven rugs
  Tariff Item Description of goods Drawback rate MEIS benefits
570201 Of Wool or fine animal hai 3.7% 5% of FOB value of export to all market.

57023110, 57023140

57023210, 57023920

57024210, 57024230

57025021, 57029110

57029210, 57029910

57029920.

570202 Of Silk 9%
570203 Of Man Made Fibres 1.7%
570204 Of Cotton 2.3%
570205 Of Jute 1.5%
570206 Of Coir 1.5%
570299 Of Others 1.5%

Carpets and other textile floor coverings, tufted, whether or not made up
  Tariff Item Description of goods Drawback rate MEIS benefits
570301 Of Wool or fine animal hair 3.1% 0% or 2% or 5% on FOB value of export depending on types of goods and types of market where goods exported.
570302 Of Wool or fine animal hair containing 15% or more by weight of silk 3.1%
570303 Of Man Made Fibres 1.5%
570304 Of Cotton 2.3%
570305 Of Jute 1.5%
570306 Of Coir 1.5%
570399 Of Others 1.5%

 –

Carpets and other textile floor coverings, of felt, not tufted or flocked, whether or not made up
  Tariff Item Description of goods Drawback rate MEIS benefits
570401 Of Wool or fine animal hair 3.1%  

No MEIS benefits.

570401 Of Man Made Fibres 1.5%
570499 Of Others 1.5%

Other carpets and other textile floor coverings, whether or not made up
  Tariff Item Description of goods Drawback rate MEIS benefits
570501 Of Cotton 2.3% 5% for export carried under tariff heading 57050019/41/49 to all market.
570502 Of Wool or fine animal hair 1.5%
570503 Of Man Made Fibres 1.5%
570504 Of Jute 1.5%
570505 Of Coir 1.5%
570599 Of Others 1.5%

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