Exporters under GST - How GST shall impact the exporters in India

 

1.0 Introduction

Exporters are the only category of people in India where the government doesn’t mind refunding taxes. Exports give a boost to the economy and hence, government is always eager to provide the various benefits and support to the exporters in India so that Indian economy can remain in good shape.

Taxes play a very important role to exporters because it has a direct impact on the price of the exporting product which ultimately decides its competitiveness in the international market.

Hence, let us see what GST has got for the exporter in India.

 

2.0 Definition of Exports under GST

The definition of export under GST has been categorized under two parts which are defined as follows:

• Exports of goods: Export of goods means taking goods out of India. So the definition is very simple and easy to understand.

 

• Exports of Services: The definition of export of services is rather technical than off goods, but we will define it with ease for you.

 

Export of services means the supply of any service when:

• The supplier is located in India
• The recipient of service is located outside India
• The place of supply is located outside India (it is generally the address of the recipient of service.
• The payment for such service has been received by the supplier of service in convertible foreign exchange i.e. dollars etc.
• 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; - Not very important

Further, exports of goods and services are treated as Zero rated supplies under GST. Let us understand all the different aspect of the GST on exporters in India.

 

3.0 Mandatory Registration for Exporters under GST

As per CGST Act, the GST registration is mandatory if any single rupee revenue is earned outside the state and from outside India. Hence, if you are an exporter, then you need to take registration under GST.

 

4.0 Will basic exemption limit applies to Exporters under GST?

No, as per the GST law, exemption limit of Rs.20 lakh does not apply to the exporter in India. However, exporters are that class of taxpayers who can export goods without any tax.

So even if the basic exemption of Rs.20 lakh does not apply to you, you still enjoy a permanent exemption from taxation as you are an exporter.

 

5.0 How to Export under GST

This is a very valid concept because every person is not aware of what will be going to happen to the export procedure in India. Let us clear the doubt, and explain you the process.

Under GST law, a registered taxable person shall be eligible to claim a refund on the export of goods or services or both either in the following ways:

• He may export the goods or services on payment of IGST by taking the input tax credit and later on claim the refund of the output tax liability.

• The second option is that he may supply goods or services or both under bond or with a letter of the undertaking without payment of tax and later on claim the refund of unutilized input tax credit.

 

Let us now understand how refund can be claimed by the exporters under GST.

 

6.0 Concept of Provisional Refund under GST in India

This is one of the best things that happened to the exporter in India. As per the GST law, 90% of the tax amount shall be refunded to the exporter within 7 days. Hence, we welcome this step of the government. Let us see how the whole process of provisional refund works:

 

6.1 Grant of provisional refund (only in case of exports)

 

1. In the case of any claim for refund on account of export of goods and/or services made by registered taxable persons, other than such category as may be notified, the proper officer may refund 90% of the total amount so claimed on provisional basis subject to some conditions and restriction.

 

6.2 Conditions to claim the provisional refund

1. The provisional refund can only be claimed in case of export of goods and/or services.
2. The refund shall be granted to the person only if he has not been prosecuted for any offense under the Act or under an existing law where the amount of tax evaded exceeds two hundred and fifty lakh rupees during last 5 years.
3. The refund amount shall exclude any amount of input tax credit provisionally accepted.

Meaning of provisionally accepted Input tax credit (ITC)

Any credit of input tax claimed, as self-assessed in his return, such amount shall be credited to his electronic credit ledger is known as provisionally accepted input tax credit.

     4. No proceeding of any appeal, review or revision is pending on any of the issues which form the basis of the refund and if pending, the same has not been stayed by the appropriate authority or court.

 

6.3 Initial verification and order of refund by proper officer

1. The proper officer shall conduct a scrutiny of the claim and the evidence submitted in support of provisional refund.
2. After the scrutiny, if he is satisfied that the amount claimed as a refund on a provisional basis is due to the applicant, he shall make an order in FORM GST RFD-4, sanctioning the amount of refund due to the said applicant on a provisional basis.
3. He shall pass the order within a period not exceeding seven days from the date of the acknowledgement.
4. The proper officer shall issue a payment advice in FORM GST RFD-8, for the amount sanctioned under sub-rule (2) to be electronically credited to any of the bank accounts of the applicant mentioned in his registration particulars and as specified in the application for refund.

 

6.4 Final order sanctioning refund

Once provisional refund is finalised, then order sanctioning final refund shall be made as per the following criteria;

1. Where, upon examination of the application, the proper officer is satisfied that a refund is due and payable to the applicant, he shall make an order in FORM GST RFD – 5, sanctioning the amount of refund to which the applicant is entitled.

2. In the case where the amount of refund is completely adjusted against any outstanding demand under the Act or under any earlier law, an order giving details of the adjustment may be issued in FORM GST RFD-6.

 

7.0 Compliances by exporters under GST

Now, this is something which is new to the exporters, the GST compliance. The following needs to be done for each month under GST:

• Upload each and every invoice issued on the GST portal.
• Upload each and every purchase invoice on the GST portal.
• File outward return (sales return) by 10th of the following month.
• File inward return (purchase return) by 15th of the following month.
• File consolidated return by 20th of the following month.
• Pay all the due taxes before 20th of the following months.

 

Apart from the above, there may be other specific compliance, for which you may ask us specifically at info@hubco.in.

 

8.0 Invoicing format by Exporters

The tax invoice shall be the same for all the taxpayers except the following changes for exporters:

• In case of export of goods and services, one need to mention on the invoice “Supply meant for export on payment of integrated tax” or

“supply meant for export under bond or letter of undertaking without payment of integrated tax”

 

• Further, it should also mention the following details:

• Name and address of the recipient
• Address of delivery
• Name of the country of destination.

 

9.0 GST Tax rate on Products and Services

GST tax rate on products and services shall be based upon the HSN code and hence, select your HSN code properly so that you don’t end up paying tax under the wrong head.

Hence, we are preparing the search on HSN code so that you can save a lot of time on searching for tax rates.

 

10.0 Conclusion

In the case of any doubt or query, you can email us at info@hubco.in.

 

Related Links:

• GST Registration
• GST Return Filings
• GST Software