All about Export Invoices

Businesses today are relatively well versed with GST requirements for intrastate and interstate invoices. However, questions tend to arise in cases where the place of supply is outside India. Export invoices help the customs authority verify the shipments’ contents and calculate the applicable taxes on them.

Meaning of an export invoice

An export invoice is a document containing the description of the goods or services provided by an exporter and the amount due from the importer. The format is relatively similar compared to a regular tax invoice with a few additional details in it.

Importance of raising an export invoice

• In the case of an insurance claim, the export invoice serves as a document for proof.
• It serves as evidence that the particular transaction between that buyer and seller has taken place.
• It forms an important part of the shipping-related documents.
• The government authorities may refer to the export invoice to determine the actual value of the goods and calculate the applicable taxes on them.
• To clear the goods from customs in the destination country, the importer may utilise the export invoice.

Indian laws on the export invoice

Often, the question arises as to whether commercial invoices and export invoices are the same. An export invoice includes the elements such as commercial invoice, proforma invoice and packing list. Export invoices are used by the governmental authorities in the assessment and calculation of taxes and duties to be levied.

As per GST law, there are three types of exports-

• Export under Bond/LUT

It is possible to export goods or services without paying IGST. The provisions in CGST regulations, 2017 for exporters who choose to export without IGST are spelt out in section 96A. It is mandatory to file a Letter of Undertaking when exporting goods or services without paying IGST.

Letters of Undertaking (LUsavesave exporters the hassle of seeking a refund and eliminates blocking funds using tax payments. The LUT will be furnished as per the GST RFD 11 form by any registered person who-

• Is registered under the GST regime
• Want to supply goods without the payment of IGST
• Intends to supply goods overseas or to SEZs or to places in India itself

• Export with IGST

Contrary to the first method, the exporter will have to pay the IGST at export and then claim a refund later on. A refund can be claimed for:

• The portion of the ITC (Input Tax Credit) remains unutilised.
• IGST paid on the goods and services exported.

• SEZ with IGST

To boost exports, there are certain relaxations given in terms of taxes to be paid on exports. The supply of goods to an SEZ is treated as a zero-rated supply, which means the taxes on the export need not be paid. 

Time limit to raise an export invoice under the Indian law

As per Section 31 of the CGST Act, 2017, the time limit is dependent on whether it is a supply of goods or a supply of services.

• Where the supply involves the movement of goods
  • The invoice is to be issued before or at the time of removal of the goods for delivery.
• Where the supply involves services
  • The invoice is to be issued before or after providing the service but within a specified period.

Contents of an export invoice

• Name, address, contact details and GSTIN of the exporter
• Name, address (billing as well as shipping address) of the recipient
• Date of issue of invoice
• Due date
• Invoice number
• Conversion rate from INR to the applicable currency
• The total value of the invoice
• Type of export
• Details of the shipping bill
• Signature (physical or digital) of the authorised person
• Notes (to add a message to the importer, if any)

Sample Format of an export invoice

How are packing and shipping dealt with within an export invoice?

International shipments require a packing list to guard against incorrect cargo. This document supports goods being shipped from one business to another and can accompany a certificate of inspection. The export invoice contains certain details that give information regarding certain details related to packing and shipping. The following details will be present in the export invoice-

• Container number
• Details regarding the country of origin and destination
• Port of origin and destination
• Shipping mark
• Container seal number
• Description of goods – HSN, Rate, Quantity, Units.

Use of currency in an export invoice

As per the RBI Master Directions (RBI/FED/2015-16/11), there is no restriction on export invoices to contain foreign currency only. They may be presented in INR as well.

• The invoices may be presented in either freely convertible currency or Indian Rupees.
• The proceeds received from exports will be collected in freely convertible currency.
• For specific exports, proceeds may be realised in INR provided funds are received through a freely convertible Vostro account of a non-resident bank in any country other than a member of the Asian Clearing Union or Nepal or Bhutan.

FAQs on the export invoice

Is e-invoicing mandatory for exports?

No, e-invoicing is not mandatory for everyone. E-invoicing does not apply to any government department or any local authority. SEZs are exempted from issuing e-invoices. As per the notification issued on 8th March 2021, all businesses with an aggregated turnover of more than Rs.50 crores will have to implement the e-invoicing system. 

Can we export invoices in INR?

There is no mandatory requirement that states that export invoices have to be issued in foreign currency only. Therefore, an exporter may issue the invoice in INR as well.

What is DBK for export?

DBK stands for Duty Drawback Scheme. It is the refund of excise duty paid on goods that are exported.