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Deemed Exports is not a new term under the indirect tax system. Foreign trade policy entails a detailed discussion and schemes governing the same. Under GST, the term deemed exports are defined under the IGST Act.
Recent Updates on Deemed exports
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.
Export of goods, in common parlance, means taking goods outside India. Such supplies are treated as zero-rated supplies under GST. However, the Central Government may notify certain categories of supplies of goods, which would be treated as deemed exports. This means that such supplies shall be treated as exports even if such goods are not taken outside India.
CGST notification no. 48/2017 – Central Tax dated 18th October 2017 has notified the following supply of goods as deemed exports:
Note: Deemed exports have also been defined under the Foreign Trade Policy 2015 – 2020 (FTP). However, the definition of deemed exports under FTP is different from the definition under GST law and should not be considered while applying GST provisions. A particular supply of goods can be deemed exports under FTP but may not qualify as deemed exports under GST. The purpose of the two legislations is different.
For example, Dealer ‘A’ (located in Rajasthan) sells goods to Dealer ‘B’ which is an EOU. B, in turn, sells the goods to a customer ‘C’ in Germany. Supply by A to B is treated as deemed exports. Supply by B to C is treated as exports.
Unlike exports, deemed export supplies are not zero-rated supplies by default. All deemed export supplies will be subject to GST at the point of supply. Supplies cannot be made under Bond or LUT without payment of tax. Tax should be paid on such supply and then be claimed as refund.
Subject to certain conditions, refund of tax paid can be claimed by either of the following persons:
Note: The recipient is not eligible to claim the input tax credit (ITC) in case refund of tax paid is being claimed by the supplier.
Documentary evidence required to claim a refund
In case the supplier is claiming a refund of tax paid on deemed exports, the following details/ documents must be produced:
For obtaining a refund of tax paid on deemed exports, the supplier or recipient is required to file an application in Form GST RFD – 01 with supporting documents. Online filing and processing of refund claims in case of deemed export supplies are allowed. The refund claim can be filed within two years from the date on which return relating to such deemed export supplies is furnished electronically.
It should be noted that CGST notification no. 49/2017 dated 18th October 2017 also sets out the list of evidence that the supplier of considered export supplies must produce in order to demand a refund.
Declaration in Statement 5B must be filled in and form part of Annexure I of RFD-01 refund application.
|Sl. no||Details of invoices/credit notes/debit notes of outward supplies in case refund is claimed by supplier/Details of invoices of inward supplies in case refund is claimed by recipient||Tax paid|
|GSTIN of the supplier||No.||Date||Taxable value||Type (Invoice/credit note/debit note)||Integrated tax||Central tax||State or Union territory tax||Cess|
ITC on inputs taken for manufacture of deemed exports, shall be utilised for sale of taxable supply (other than nil rated or fully exempted goods). A CA certificate is submitted to the jurisdictional commissioner of GST or any other officer authorised by him within six months of such supply.
Deemed export supplies are required to be disclosed in Table 6C of Form GSTR – 1. The registered dealer has to give invoice details and tax paid on such supplies.
|GSTIN of recipient||Invoice wise details||Shipping bill / Bill of export||Integrated tax||Cess|
|6C. Deemed exports|
In Form GSTR – 3B, deemed exports are disclosed in Table 3.1 (b) with other zero-rated supplies.
|3.1 Details of Outward supplies and inward supplies liable to reverse charge|
|Nature of supplies||Total taxable value||Integrated tax||Central tax||State / UT tax||Cess|
|(b) Outward taxable supplies (zero-rated)|
Amendment in B2B deemed export invoices is required to be disclosed in Table 9A (B2B amendments). Amendment in debit/ credit notes would be reported in Table 9C.
The supplier can claim refund only in cases where the recipient does not avail of input tax credit on such supplies and furnishes an undertaking to the effect that the supplier may claim the refund.
You must upload any documents that are needed to be filed with Form RFD-01, as well as any other documents that the refund sanctioning authority can request, as notified under CGST Rules or Circulars issued in the matter. Statement 5B must be uploaded with the details of the documents for which a refund is being sought.
Yes, you can file a refund claim for several tax periods from two separate fiscal years.
When a refund application is filed in Form RFD-01 and an ARN is created, the refund application, along with any documents attached at the time of filing, is assigned to a Refund Processing Officer for processing. The monitor status feature allows the taxpayer to keep track of the status of their refund application. After reviewing the submission, the Jurisdictional Authority may process it and issue a refund.