The new GST return filing system is expected to make the process of filing regular returns and tracking of ITC smooth and easier. For a quick glance at how the reporting of exports varies between the present returns and new returns, read our article on comparison of exports.
In this article, we analyse in detail process for claiming GST refunds on exports. It includes both goods and services. Specifically, it will address the GST refund claims on exports under the new GST returns system, that will be implemented from April 2020 onwards.
1. Overview of GST refund process for exports under GST
An export supply under the GST law is also called a zero-rated supply since the rate of tax on export supplies is intended to effectively be nil or zero. Deemed exports are also zero-rated supplies. The process of declaration of exports varies slightly under each method. The GST compliance involved for exports can be understood from the below flowchart:
2. GST refund process for exports under the present return filing
a) Export with payment of IGST:
Exporters can claim the refund of IGST paid at the time of export. The GST refund process for exports in case of goods begins with by taking reference to a primary document known as shipping bill. The shipping bill and other export-related documents should be filed on the Indian Customs Electronic Commerce Gateway (ICEGATE).
GSTR-1: GST refund process for exports continues on the GST portal in form GSTR-1. These details are declared in GSTR-1 under Table ‘6A – Exports Invoices’. The details required in this table are as follows:
- Invoice date
- Port code
- Shipping bill no./bill of export no.
- Shipping bill date/bill of export date
- Total invoice value and taxable value
- GST payment (‘With Payment of Tax’ needs to be selected)
- Whether the supply is eligible for tax at a differential percentage, as notified by the government
- The tax amount which is auto-populated but can be edited
Care must be taken to ensure that all the details declared in this table match with the corresponding details declared in the shipping bill. In case of export of services, fields at 2, 3, and 4 will be left blank.
In case of deemed exports, the invoice will be uploaded as a normal B2B invoice in Tables 4A, 4B, 4C, 6B, 6C – B2B invoices. When entering invoice details, the checkbox for ‘Deemed exports’, ‘SEZ Supplies without payment’ or ‘Sale from bonded warehouse’ may be selected, as applicable.
GSTR-3B: Further, GST refund process for exports will involve declaration in GSTR 3B too. The relevant amounts need to be filled up in Table 3.1(b)- ‘Outward taxable supplies (zero-rated)’. The IGST amount entered here should be either equal to or greater than the total IGST filled in Table 6A of the corresponding GSTR-1.
Form GST RFD-01/RFD-01A: GST refund process for exports will need the filing of a form RFD-01 (completely online) or RFD-01A (manual) in particular cases only.
(1) Export of Goods: In case of export of goods with payment of tax, there is no separate refund application required as the shipping bill itself will be treated as the refund application. The details entered in Form GSTR-1 will be matched with the details mentioned in the shipping bill as filed with ICEGATE. The ICEGATE will then process the refund and credit the same to the bank account as mentioned by the taxpayer on its portal.
(2) Export of Services: A separate refund application in RFD-01A is required. Such taxpayer needs to login to the GST portal and selecting Services > Refunds > Application for Refund > Export of Services with payment of tax > RFD-01A. The details relating to the export of services will need to be uploaded using the offline utility. The amount of refund and the bank account number in which the refund is to be credited will also need to be provided. On successful filing, an Application Reference Number (ARN) will be generated, which can be used to track the status of the refund application.
b) Export without payment of IGST:
GST refund process for exports, in this case, involves a different document. The option to export goods without payment of tax can either be used under the cover of a Letter of Undertaking (LUT) or a bond. In such case, any ITC accumulated on inputs/input services unutilised will be available for refund. The option of LUT is available only for a select number of exporters satisfying a prescribed criterion. The procedure is similar to the export of services.
Form GST RFD-11: The LUT can be filed in Form GST RFD-11 on the common portal by accessing Services > User Services > Furnish Letter of Undertaking (LUT). The necessary details are filled and uploaded along with the digital signature as per the LUT filing procedure. GST refund process for exports will not be complete without this filing.
In case of a bond, it must be executed manually on a stamp paper, signed and submitted to the jurisdictional Deputy/Assistant Commissioner along with the relevant documents like Form RFD-11 on the letterhead of the taxpayer, bank guarantee, authority letter, etc. The Jurisdictional Deputy/Assistant Commissioner, after inspection of the documents submitted, will issue a signed letter acknowledging the same.
Form GST RFD-01/ RFD-01A: Similar to the GST refund process for exports in case of tax payment, taxpayers should use this form. The details in relation to ITC attributable to zero-rated supply needs to be entered and submitted on RFD-01 (completely online) or RFD-01A (manual). The taxpayer should confirm if RFD-11 is filed. Upload relevant documents and affix the digital signature to submit the form and an ARN gets generated for tracking.
The process of declaration of invoices in Form GSTR-1 is the same except that in the GST Payment field, ‘Without payment of tax’ needs to be selected.
3. GST refund process for exports under the new return filing
The GST refund process for exports and refund application in RFD-01A and RFD-11 will remain the same under the new GST return system. There is a change in the reporting of export details in the return. Following are the forms used to report refund details on exports.
Form ANX-1: GST refund process for exports under new GST returns will begin with ANX-1. In this form, the invoice details of the exports are to be uploaded in Table ‘3C – Exports with payment of tax’ and Table ‘3D – Exports without payment of tax’ depending on whether the IGST is paid or not in respect of the supply.
For a tax period, all such export invoices must be reported on which the shipping bills/bill of export are available till the date of filing the GST returns i.e, the 20th of the next month for monthly filers or 25th of the month following the quarter for quarterly filers. The rest will be reported in the next tax period.
The details required in this field would be as follows:
- Document details (invoice, credit or debit note, serial number, date, value)
- HSN code (at the six-digit level)
- Tax rate and taxable value
- Relevant tax amounts (in case the export is made with payment of tax)
- Shipping bill/bill of export (no. and date)
Once the implementation begins, a separate functionality will soon be made available for updation of details of shipping bill/bill of export even after the date of filing return of the relevant tax period. It will then automate GST refund process for exports to a massive extent.
FORM RET-1: GST refund process for exports under the new GST returns system will continue with the declaration in RET-1. The value and the tax amounts in relation to the exports declared in ANX-1 will be auto-populated in Table 3A (row 3 and 4) for outward supplies. Hence, the taxpayer just needs to verify the same and not re-enter the details.
New amendment return introduced: The amendment to the export details whether or not with payment of IGST, can be done in ANX-1A that will amend the original annexure ANX-1 submitted for a tax period- either monthly or quarterly. It can be done by referring to the original details. These will be auto-populated to RET-1A. Note that the amendment is not allowed on the export documents on which refund is already successfully claimed. On the other hand, those export invoice details missed declaring in prior periods can be reported in the current period’s ANX-1 itself.
4. Has the GST refund process for exports become easier?
The major change that can be noticed is that there is auto-population of details entered in ANX-1 into RET-1. It is unlike the present/old system where reporting in GSTR-1 is independent of GSTR-3B.
There is going to be an integrated facility to import details of shipping bills as well as bill of entry from ICEGATE to GST portal for exports and imports. This manual process of reporting documents is temporary since the new GST system once implemented, will have the portal auto-populating figures directly from the ICEGATE database into the respective tables in forms ANX-1 and 2.
No changes have been observed in the process of applying for the refund in RFD-01/01A. When it comes to export of goods, the filing of shipping bill is considered to be an application for refund and it continues under the new return filing system. In this case, quarterly filers of returns may have to wait longer for their refund to be processed.
Thus, the overall impact of reporting of exports and claiming of refund under the new return filing system seems to be minor but definitely easier.