Translate this article in your language

Export of Goods and Services Under GST

Putting up in simple terms, ‘export’ means trading/ supplying of goods and services outside the domestic region of a country.

Under GST export of goods and services will be deemed as ‘inter-State supplies’ and will be treated as ‘zero-rated supply’. ‘Zero-rated supply’ makes the entire supply tax free. In nut-shell, there will be no tax burden either at the Input Stage or at the Final Output Stage.

The present article tries to clear up the entire concept of GST implications on the export of goods and services.

Export of Goods and Services Under GST

Exports under GST

As we know, ‘goods’ being tangible in nature can easily be deemed to be exported as and when it crosses the territorial borders of India. However, ‘services’ being intangible, export of it has a different treatment.

‘Export of Goods’ defined under section 2(5) of the IGST Act and ‘Export of Services’ defined under section 2(6) of the IGST Act clarifies the same. Both the definitions are simplified hereunder-

‘Export of Goods’ means taking goods out of India to a place outside India. Further, ‘Export of Services’ means a supply of service satisfying all the following conditions

  1. 1
    The supplier of service is located in India,
  2. 2
    The receiver of service is located out of India,
  3. 3
    The place of supply of service is out of India,
  4. 4
    The supplier receives the payment in convertible foreign exchange or India rupee when permitted by RBI, and
  5. 5
    The supplier and the receiver of service should not be the establishment of a distinct person.

Further, two more definitions i.e. ‘Zero rated supply’ defined under section 2(23) read with section 16(1) of the IGST Act, and ‘Deemed exports’ defined under section 2(39) read with section 147 of the CGST Act are also important for understanding the concept of ‘exports’ under GST.

Both the definitions are explained hereunder:

Zero-Rated Supply

Zero-rated supply’ means export of goods or services or supply of goods or services for authorized operations to a SEZ developer or SEZ unit.

Deemed exports

Deemed exports’ refers to the supplies which are deemed to have been exported. Here, the supplied goods don’t leave India. Notably, the supply of such goods should be notified under section 147 of the CGST Act.

Some of the examples of deemed exports are:

  1. 1
    Supply of goods against Advance Authorization.
  2. 2
    Supply of goods to Export Oriented Unit (EOU).
  3. 3
    Supply of goods to EHTP [Electronic Hardware Technology Park], STP [Software Technology Park] or BTP [Bio-Technology Park].
  4. 4
    Supply of goods against Export Promotion Capital Goods Authorization (EPCG).
export of goods and services under gst

Export options available to the exporters

An exporter is facilitated with the following two types of export options-

  1. Export of goods/ services on payment of IGST [Section 16(3) (b) of the IGST Act read with rule 96 of the CGST Act]; and
  2. Export of goods/ services without payment of IGST under bond/ LUT [Section 16(3) (a) of the IGST Act read with rule 96A of the CGST Act].

Both the above export options are briefly explained hereunder:

Export of goods/ services on payment of IGST

Here the exporter exports the goods/ services on payment of IGST. And, the refund is available in accordance with provisions of section 54 of the CGST Act.

Export of goods/ services without payment of IGST (i.e. Export under Bond/ LUT)

Here, the exporter exports the goods/ services without the payment of IGST. And, refund of unutilized Input Tax Credit is available to the exporter.

Notably, since, the tax is not paid while exporting, the exporter here is required to furnish either a bond or a Letter of Undertaking (LUT). Integral facts of bond/ LUT is summarized hereunder-

  • Bond/ LUT binds the exporter to make payment of tax under following situation-
    • When goods are not exported – tax is to be paid within 15 days after expiry of 3 months from the date of invoice; or
    • When the payment is not received – tax is to be paid within 15 days after expiry of 1 year from the date of invoice.
  • Bond/ LUT is to be submitted, before undertaking export, to the jurisdictional commissioner in Form GST RFD-11.
  • Running bond account is to be maintained. Whereas, LUT is valid for the whole Financial Year.
  • As per circular no. 40/14/2018-GST dated 6th April 2018, for acceptance of LUT there is no need for submission of any physical document.
  • Furnishing of Bond (i.e., LUT is not permissible) is mandatory under any of the following situations-
    • The exporter is prosecuted for any offence under either of the following laws-
      • The Integrated Goods and Services Tax Act, 2017,
      • The Central Goods and Services Tax Act, 2017,
      • Any of the existing laws.
    • The amount of tax evaded is more than INR 250 Lakhs.

GST Refund Provisions in Case of Export of Goods

Refund provisions in case of export of goods

Refund provisions in case of export of services

Filing of GST Refund Claim

· A shipping bill filed will be deemed to be a refund application when
 
1. The carrier of the export goods files an export manifest or an export report mentioning the shipping bill/ bill of export number and date; and
 
2. The exporter furnishes a valid return in Form GSTR-3/ Form GSTR-3B.

· Exporters, not satisfying the above conditions, need to separately file a refund claim in Form GST RFD-01.

The exporter is required to file a refund application in Form GST RFD-01

Time limit of filing the refund claim

Within a period of two years from

· The date on which ship/ aircraft leaves India (when goods are exported by sea/ air); or

· The date on which goods pass the frontier (when the goods are exported by land); or

· The date of dispatch of goods by post to a place outside India (when the goods are exported by post); or

· The date on which relevant return is furnished (in case of deemed export).

Within a period of two years from

· The date of issue of the invoice (in case of advance); or

· The date of receipt of payment (in any other case).

Important condition to be satisfied before filing the refund claim

Exporters are mandatorily required to file export details in Table 6A of Form GSTR-1

Exporters are mandatorily required to file export details in Table 6A of Form GSTR-1

Automate Your GST Filing From ERP Dashboard

If you would like to eliminate all clerical mistakes in GST filing and want to file all GST Returns from your ERP dashboards itself, GSTHero is the right ecosystem solution for you

gst return filing

CA Poonam Gandhi

About the author

Poonam Gandhi is a Chartered Accountant and a Lawyer. She is a Professional Freelance Content Writer/ Editor and an Educator. She masters in creating result-oriented as well as Search Engine Oriented Content. Currently, she is associated with some of the topmost leading sites of India. She holds more than 3 years of experience in the content field. Before entering the content writing field, she possessed a wide practice experience of more than 9 years, specifically, in the field of Indirect Taxation.

Follow me:

Leave a Reply

Your email address will not be published. Required fields are marked

{"email":"Email address invalid","url":"Website address invalid","required":"Required field missing"}