Impact of GST on Export of Goods and Services

GST has changed the game for exporters in India by making taxes simpler and fairer. With GST, exports are treated as zero-rated, which means exporters don’t have to pay tax on their sales but can get back the taxes they paid on materials and services. This helps businesses save money, speed up processes, and compete better in the global market. In short, GST makes exporting easier and more profitable for Indian companies.

GST on Exports: How Will It Be Levied?

The export of goods or services is considered as a zero-rated supply. GST will not be levied on the export of any kind of goods or services.

A duty drawback was provided under the previous laws for the tax paid on inputs for the export of exempted goods. Claiming the duty drawback was a cumbersome process. Under GST, the duty drawback would only be available for the customs duty paid on imported inputs or central excise paid on certain petroleum or tobacco products used as inputs or fuel for captive power generation. There was some confusion surrounding the refund of the tax paid by exporters on the inputs. 

An exporter dealing in zero-rated goods under GST can claim a refund for zero-rated supplies as per the following options :

Option 1:

Exporters can supply goods or services under a bond or Letter of Undertaking without paying integrated tax and can later claim a refund for any unused input tax credit. To claim this refund, exporters must apply on the GST portal, either directly or through a facilitation centre notified by the GST commissioner. Before submitting the refund application, an export manifest or report must be filed under the Customs Act.

Option 2:

Exporters, the United Nations, embassies, and certain specified agencies can claim a refund of IGST on supplied goods or services after fulfilling prescribed conditions and procedures. Refund applications must comply with section 54 of the CGST Act. For exports, filing a shipping bill serves as a deemed application for refund of the IGST paid. However, this application is considered valid only once the person responsible for the shipment files the export manifest or report, which includes the shipping bill’s number and date.

Deemed Exports

The supply of goods or services to the following would be treated as exports under GST

• Supply of goods by a registered person against Advance Authorisation
• Supply made to an Export oriented undertaking (EOU) or Hardware Technology Park unit, Software Technology Park unit, Biotechnology Park unit
• Supply of capital goods by a registered person against Export Promotion Capital Goods Authorisation
• Supply of gold by a bank or Public Sector Undertaking against Advance Authorisation as per Customs law

Filing of returns under GST for the deemed export is to be done as per the general procedures provided for export under GST.

Documents Required for Claiming Refund on Exports

Here is a list of documents required for claiming refund – 

• Copy of return evidencing payment of duty.
• Copy of invoice 
• Document proving that the burden of paying tax has not been passed on (CA certification or self-certification). 
• Any other document required by the government.

With GST in place, the export industry in India would be able to have internationally competitive prices due to the smooth process of claiming input tax credit and the availability of input tax credit on services.