Detailed Analysis: GST on Export of Goods and Services

 


GST on Export of Goods and Services

Export of Goods under GST:

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. 


Export of services under GST: 

Export of service is defined under section 2(6) of the IGST Act means the supply of any service when, —

(i) the supplier of service is located in India;

(ii) the recipient of service is located outside India;

(iii) the place of supply of service is outside India;

(iv) the payment for such service has been received by the supplier of service in convertible foreign exchange or in Indian rupees wherever permitted by the Reserve Bank of India; and

(v) the supplier of service and the recipient of service are not merely establishments of a distinct person in accordance with Explanation 1 in section 8;

 

Treatment of Exports:

Under the GST Law, export of goods or services has been treated as:

Ø  Inter-State supply and covered under the IGST Act. i.e the goods and services can be exported either on payment of IGST which can be claimed as refund after the goods have been exported.

Ø  ‘zero rated supply’ ,i.e. the goods and services can be exported  under bond or Letter of Undertaking (LUT).

 

Options to claim refund: 

According to Section 16(3) of the IGST Act, person making a Zero Rated Supply can opt for any of the following two options:

(i) Supply  goods or services on payment of IGST and then claim the GST refunds of such tax paid; or

(ii) Supply goods or services under a bond or, a Letter of Undertaking (LUT) without paying IGST and then claim a refund of unutilized ITC.

 

Time limit for claiming GST Refund:

Under GST, the applicant should file GST refund claims within 2 years from the relevant date.

 With respect to export of goods the relevant date will be:

Ø The date on which the carrier leaves India, where in the goods are exported by ships or aircraft

Ø The date on which the carrier crosses the frontiers of the nation, wherein the goods are exported by road or rail

Ø The date of dispatch of goods, wherein the goods are dispatched through post

 

  With respect to export of services the relevant date will be:

Ø The date of receipt of payment in convertible foreign exchange, wherein the service has been completed before the receipt of payment

Ø The date of issue of invoice, wherein the payment had been made in advance

Ø The end of the financial year, during which the demand for refund is made

 

Documents required for claiming of Refund:

The GST refund can be claimed by filing the details in Table 6A of the GSTR-1 and thereafter by filing the monthly summary return in GSTR-3B. In case of export of goods with IGST payment, the export document which is the Bill of Export or the Shipping Bill itself is considered as the application for refund of IGST. The GST Officer after verification of the document, if satisfied shall credit the refund amount into the bank account as declared by the taxpayer at the time of GST registration. The aseessee should declare the Export if paid IGST in RFD-1 in addition to GSTR-1 and GSTR-3B. The exporter must fill ‘Tax amounts’ as ‘zero’ while making the declaration in Table 6A and Table 6B of GSTR-1. 

 

Time Taken for granting of Refund:

 (a) In case of refund of tax on inputs used in exports:

Ø  Refund of 90% will be granted provisionally within seven days of acknowledgement of refund application

Ø  Remaining 10% will be refunded within a maximum period of 60 days from the date of receipt of application complete in all respects

Ø  Interest @ 6% is payable if full refund is not granted within 60 days

(b) In the case of refund of IGST paid on exports:

Upon receipt of information regarding furnishing of valid return in Form GSTR-3 by the exporter from the common portal, the Customs shall process the claim for refund and an amount equal to the IGST paid in respect of each shipping bill shall be credited to the bank account of the exporter.

 

 

 

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