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When we talk of exports under GST, we have to understand the laws and regulations applicable to the import and export of both services and goods. In this article, we give you the details of these laws to help you with your business.
1st February 2021
Union Budget 2021:
IGST Act was also amended for section 16 that defines a zero-rated supply. Three amendments are made
1. To state that supply to SEZ units /developers will be zero-rated only if it is authorised operations.
2. Only notified persons or supplies of goods/services can avail the status of zero-rated when IGST is paid.
3. foreign exchange remittance will be linked in case of export of goods with the refund.
Sub-Section 5 of section 2 of IGST Act, 2017 defines – “Export of Goods”, with its grammatical variations and cognate expressions, means taking out of India to a place outside India. Sub-Section 10 of section 2 of IGST Act, 2017 defines – “import of the goods” with its grammatical variations and cognate expressions, means bringing goods into India from a place outside India.
“Import of Services” as defined under sub-section 11 of section of IGST Act, 2017 means the supply of any service, when –
Supplies which do not form part of export of goods or services
The definition of import of service given under GST also excludes services imported from a foreign branch.
Indian suppliers of services and manufacturers of goods have to quote in competition with foreign suppliers of goods and services. Such Bids evaluation is done without considering the customs duty. Since such supply of goods and services are financed for specific projects (projects financed) with the free foreign exchange, these supplies are considered as ‘deemed exports’. Similarly, supplies made to Export Oriented Units also known as EOUs and services do not leave the country. Suppliers get their payment in Indian currency and not in foreign exchange. “Deemed exports” generally refer to those transactions under which supply of goods do not leave the country, and payment for such supplies is received in Indian Rupees shall be treated as ‘deemed exports’, provided that goods are manufactured or produced in India. As per Foreign Trade Policy 2015-2020, followings are treated as deemed exports:
As per the provisions contained under 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 claim the refund of the GST paid under one of the following two options:
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 prescribed, without payment of integrated tax, and then claim a refund of unutilized input credit.
The registered taxable person (or exporter) is required 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 refund.
Option 2: Any exporter or Embassy or United Nations or other organisations/ bodies/ agencies as specified in section 55 who supplies goods or services, or both, after satisfying all the conditions, rules, procedures and safeguards as may be prescribed; and paying the IGST, can claim 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 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.
The Goods and Services Tax Network (GSTN) has introduced a utility Table 6A in the Form GSTR-1 used to claim refunds by exporters. This Table 6A of Form GSTR1 lets assessee file export related data for the relevant period that permits processing of the GST refund on the basis of the declaration made under Form GSTR 3B and Table 6A of GSTR-1. An exporter of goods or services or both can claim 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 Form GSTR1 in the relevant month.