When goods are exported out of India, a registered taxable person shall have following 2 options to claim refund:

(1) Pay the IGST First and then export the goods as per Rule 96 of CGST Rules, 2017 deals, and

(2) Export the goods without paying IGST as per Rule 96A by furnishing bond or LUT- Read-  Confusion Over Export of Services without Payment of IGST

In this write- up, the provisions related to goods exported out of India after payment of IGST are being covered.

Application for Refund

The shipping bill filed by an exporter shall be deemed to be an application for refund of integrated tax paid on the goods exported out of India.

When application shall be deemed to have been filed?

The above application shall be deemed to have been filed if the following 2 conditions are satisfied:

(a) the person in charge of the conveyance carrying the export goods duly files an export manifest or an export report covering the number and the date of shipping bills or bills of export; and

(b) the applicant has furnished a valid return in FORM GSTR-3 or FORM GSTR- 3B, as the case may be;

Transmission of export invoices contained in FORM GSTR-1

The details of the relevant export invoices contained in FORM GSTR-1 shall be transmitted electronically by the common portal to the system designated by the Customs and the said system shall electronically transmit to the common portal, a confirmation that the goods covered by the said invoices have been exported out of India.

Credit of claim of refund

Once the information is received regarding the furnishing of a valid return in FORM GSTR-3 or FORM GSTR-3B, as the case may be from the common portal, the system designated by the Customs shall process the claim for refund and an amount equal to the integrated tax paid in respect of each shipping bill or bill of export shall be electronically credited to the bank account of the applicant mentioned in his registration particulars and as intimated to the Customs authorities.

Withheld of claim for refund

In the following 2 cases claim for refund shall be withheld:

(a) a request has been received from the jurisdictional Commissioner of central tax, State tax or Union territory tax to withhold the payment of refund due to the person claiming refund in accordance with the provisions of sub-section (10) or sub-section (11) of section 54,

Transmission of intimation  to the common portal

The proper officer of integrated tax at the Customs station shall intimate the applicant and the jurisdictional Commissioner of central tax, State tax or Union territory tax, as the case may be, and a copy of such intimation shall be transmitted to the common portal.

Passing of order in Part B of FORM GST RFD-07

After transmission of intimation, the proper officer of central tax or State tax or Union territory tax, as the case may be, shall pass an order in Part B of FORM GST RFD-07.

Passing of order for refund of withheld amount in FORM GST RFD-06

Where the applicant becomes entitled to refund of the amount withheld above, the concerned jurisdictional officer of central tax, State tax or Union territory tax, as the case may be, shall proceed to refund the amount after passing an order in FORM GST RFD-06.

(b) the proper officer of Customs determines that the goods were exported in violation of the provisions of the Customs Act, 1962

The Central Government may pay refund of the integrated tax to the Government of Bhutan on the exports to Bhutan for such class of goods as may be notified in this behalf and where such refund is paid to the Government of Bhutan, the exporter shall not be paid any refund of the integrated tax.

SEZs can continue to import raw materials without payment of any duty. Supplies to SEZs would also be treated as Zero rated supplies.

Based on the above write- up let’s discuss some practical issues associated with exports: 

Ques 1 What is deemed export?

Ans. Deemed exports refer to those transactions in which goods supplied do not leave country, and payment for such supplies is received in para 7.02 of Foreign Trade Policy 2015-2020 shall be regarded as ‘deemed exports’, provided that goods are manufactured in India. Following are the examples of deemed export:

  • Supplies to EOU/ STP/ EHTP/ BTP
  • Supplies to UN Agencies

Ques 2 Can exporter claim ITC in case of export of goods?

Ans In case of zero rated supplies made without payment of tax, refund of input tax credit will be available as per proviso (i) to section 54(2) of CGST Act.

ITC shall not be allowed, in the cases where:

  1. other than exports including zero rated supplies or in cases where the credit has accumulated on account of rate tax on inputs being higher than the rate of tax on output supplies, other than nil rated or fully exempt supplies – first proviso to section 54(3) of CGST Act.
  2. the goods exported out of India are subjected to export duty – second proviso to section 54(3) of CGST Act.
  3. if the supplier of goods or services avails duty drawback of CGST / SGST / UTGST or claims refund of IGST paid on such supplies – third proviso to section 54 (3) of CGST Act.

Ques. 3 Can an exporter get exemption from the payment of GST on the export product?

Ans. An exporter would get exemption from the payment of GST on the final product and get refund of GST paid on inputs.

Ques. 4 Will IGST be refunded for Capital Goods imported under EPCG scheme?

Ans. The EPCG holder also will have to pay IGST at the time of imports and take input Tax Credit (ITC) on the duty paid. He cannot claim refund of any unutilized input tax credit after the exports.

C S EktaMaheshwari is the Author of this article and is Company Secretary by profession. The Author can be reached at csektamaheshwari14@gmail.com

Disclaimer: The entire contents of this article is solely for information purpose and have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation.. It doesn’t constitute professional advice or a formal recommendation. The author has undertook utmost care to disseminate the true and correct view and doesn’t accept liability for any errors or omissions. You are kindly requested to verify & confirm the updates from the genuine sources before acting on any of the information’s provided herein above.

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  1. POOJA MATHUR says:

    Hi ekta,

    we are exporter and trader in maharashtra. we are export material under igst export sales and these material we purchase from our local party and we paid on these material cgst and sgst . so than ho we get refund these paid taxes…please reply.

  2. Lalit Saraf says:

    Hi. We are selling textiles under IGST to Nepal customers from Indo Nepal Border area in Bihar. These people pay in cash and take the goods either with them or through agents. They make an entry in Indian customs register and then they pay the import duty in Nepal.
    How do we sellers get IGST refund for these exports?

  3. Pankaj kumar says:

    Hi Ekta, under pay first IGST then claim refund, is it necessary to show amount of IGST on face of invoice and same shall be debited to Exporter or shall be paid as Reverse Charge Basis. Means who taking export shall pay from hia own pocket first and then claim refund.

    Another condition of refund is that amount received should be foreign currency or convertible foreign currency. If same not received then IGST paid shall not be refunded. Is it true?

  4. D.Nandakumar says:

    Hi Madam,

    We have paid IGST for Capital Goods, that IGST we go to refund its possible. Our company only Export.

    Pls reply

  5. Shgaun says:

    Hi Ekta, as per my knowledge there is no need to pay any IGST on export, because export is zero rated, please explain “Pay the IGST First and then export the goods “

    1. Ekta Maheshwari says:

      Hi Shagun, you are absolutely correct, since export comes under ‘Zero rated supply’ and accordingly there shall be no tax on export. But Rule 96 of CGST Rule, 2017 talks about the tax which is paid on input (inter state purchase) for the manufacture of export oriented goods.

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November 2020