Exports Under GST

Regarding exports under GST, there are certain rules and regulations that taxpayers have to comply with it. Let us examine it in detail.

Meaning of Import and Export of Goods under GST

Sub-section 5 of section 2 of IGST Act, 2017 defines - ‘’Exports of Goods ‘’, in addition to its grammatical variations and cognate expressions, denotes moving out of India to a destination outside the country. Sub-Section 10 of section 2 of IGST Act, 2017 defines -” import of the goods’’ in addition to its grammatical variations and cognate expressions, which denotes importing goods to India from a place outside of the country.

 Meaning of Import and Export of Services under GST 

“Import of Service” as mentioned under the sub-section of IGST Act, 2017 denotes the supply of any service, as:

• The place of supply of service is in India;

• The supplier of service is located outside India; and

• The recipient of service is located in India

Supplies that do not constitute the definition of export of goods or services:

• Where the place of supply of service lies within the country but to a person located abroad. For example, a godown located in Trivandrum was rented out to a guy in Washington; the agent stays in India and offers services to a person in UAE exporting goods to Japan.

• Where the consideration for the supply of services is received in Indian currency or any other unconvertible currency. For example, supply of service by a consultancy firm in India to a firm abroad, where the payment made by an Indian branch of the overseas firm is in Indian Rupees.

• Supply of services to the foreign branch wouldn’t be covered as export of services owing to particular exclusion as “export of service”. It involves reversing the ITC as such supply of services would not be regarded as non-taxable and not as zero-rated.

The definition of import of service given under GST also excludes services imported from a branch abroad.

Deemed Exports under GST 

Indian suppliers of services and manufacturers of goods have Indian suppliers of services and manufacturers of goods have to quote in competition with foreign suppliers of goods and services. Such Bids evaluation is handled without considering the customs duty. As such supply of goods and services are financed for specific projects (projects financed) with the free foreign exchange, these supplies are regarded as ‘deemed exports. Similarly, supplies made to Export Oriented Units also known as EOUs and services do not move out of the country. Suppliers receive their payment in Indian currency and not in foreign exchange. “Deemed exports” generally refer to those transactions under which the supply of goods does not move out of the country, and payment for such supplies is received in Indian Rupees shall be considered as ‘deemed exports’, provided that goods are manufactured or produced in India. As per Foreign Trade Policy 2015-2020, the followings are treated as deemed exports:

• Supplies to Export Oriented Units, Software Technology Parks, Electronic Hardware Technology Park, Bio-Technology Parks

• Supplies against Advance Authorisation/Duty-Free Import Authorization.

• Supply of goods to mega power projects against International Competitive Bidding

• Supplies to UN Agencies

• Supply of goods as a part of nuclear projects through competitive bidding

• Supply of marine freight containers

• Supplies against Export Promotion Capital Goods authorization

• Supplies to projects against international competitive bidding

• Supplies to projects with zero customs duty

Treatment of Exports under GST 

As per the provisions of IGST law, export of goods or services or both are to be regarded as “zero-rated supplies” and a person being a registered taxable person exporting such goods or services or both shall be allowed to make a  claim for  the refund of the GST paid under one of the following two options:

• Export of goods or services or both under bond or letter of undertaking (LUT) without making any payment of Integrated Tax and could make a claim for the refund of unutilized input credit.

• Export of goods and services or both on the payment of Integrated Tax and the exporter could make a claim for the refund of the GST paid on such goods and services so exported. The above-mentioned refunds are subject to certain rules, procedures, and safeguards as may be prescribed.

Option 1: Export of goods or services or both under bond or letter of undertaking (LUT), subject to certain rules, procedures, and safeguards as may be suggested, without making any payment of integrated tax, and then make a claim for a refund of unutilized input credit.  

The registered taxable person or exporter needs to file an application for the refund on the common portal either through the facilitation center notified by the GST commissioner or can do so directly. An export manifest is required to be filed under the existing Customs Act before filing an application for a refund.

Option 2: Any exporter or Embassy or UN or other organizations/ bodies/ agencies as mentioned in section 55 who supplies goods or services, or both, after meeting all the conditions, rules, procedures, and safeguards as may be suggested; and paying the IGST, could make a claim for the refund of such GST paid on the supplied goods or services, or both. The applicant seeking the refund has to apply for the refund as per the provisions contained in U/s 54 of the CGST Act.

An exporter needs to file a shipping bill for the goods being exported to a place outside India. Under this case, the shipping bill so filed is treated as a “deemed application” for the refund of the tax paid. The deemed application shall be deemed to have been filed only if the person in charge of the shipment files the export manifest or report, mentioning the number and date of the shipping bills.

Forms for Refund

The Goods and Services Tax Network (GSTN) has introduced a utility Table 6A in the GSTR-1 Form used to make claims for refunds by exporters. Table 6A of GSTR1 lets assesse file export-related data for the relevant period that allows the processing of the GST refund based on the declaration made under GSTR 3B Form and Table 6A of GSTR-1. An exporter of goods or services or both can make a claim for the refund of Integrated GST paid at the time of export by filling the details of the tax paid GST invoice and shipping bill in his GSTR1 Form in the relevant month.