Export under GST Act

[Narendra Soni]

Dear Export,

Please suggest

Whether export will be on payment of tax or without payment of tax under GST Act.

[MADAN RAHEJA]

Dear Sir, As yet only Constitutional amendment bill has been passed by Rajya Sabha and main laws/rules/proceedure relating to GST are yet to be formulated. Although, not major changes in respect of export promotion schemes are expected, yet let us wait for GST law to be formulated.

[KASTURI SETHI]

Sir,

Likely to be without payment of tax.However, export turnover would be accounted for arriving at threshold exemption limit of SSI unit. I also agree with the views of Sh.Madan Raheja, Sir as still it is not final. Any amendment can take place till the enactment.

[Ganeshan Kalyani]

Sir, I agree with the views submitted by Sri Madan Ji and Sri Kasturi Sir. GST is draft as of today. We all will have wait. Thanks.

[Guest]

Dear Sir,

Exports shall be treated as zero-rated supply

zero-rated supply” means a supply of any goods and/or services on which no

tax is payable but credit of the input tax related to that supply is admissible;

it means there is no TAX under GST ACT on export.

This is my understanding.

Tks & rgds

Hassan

[KASTURI SETHI]

Sh.Hassan Imam Ji,

I agree with you. Your expression of views is at par with the present position regarding export.

[YAGAY andSUN]

FIEO/PUB/PR /29/16, August 30, 2016

Clarity on Zero Rating of Exports: We know that Government is committed to zero rating of exports and the same has been adequately clarified in Section (2) Sub-Section (109) of the Model GST Law. This makes it clear that on exports of goods & services, no tax will be payable but credit of the input tax relating to those exports shall be admissible. However, there is little confusion as Section 38 of the Model GST Law refers to refund of taxes on goods & services exported out of India. We require a clarification that the refund facility will be optional for the exporters on the same lines as exists under the Central Excise Act where the exporter has the option to clear the exports goods without payment of taxes or takes a refund of the duty paid by him. Those exporters who want exemption from GST on supply of goods /services for exports will be entitled for the same. A reiteration of the same will remove the ambiguity in the matter.
It may be mentioned here that section 38 Subsection 4(A) allows provision refund of 80% which may be increased to 90% as allowed presently for VAT in few States. Secondly, this 90% may be refunded within 10 days and the balance 10% within 30 days.
Further, Provisio to section 38(3)(b) of the GST Act requires the exporter to file a certificate that the incidence of the tax claimed as refund has not been passed on by him to any person. In case of exports the prices are determined by the competition in the international market and there could be cases where the exporter, in order to stay relevant and continue in business, has to execute orders below the cost which could be construed as passing on the tax refund to the buyer. Hence the said certification should not be made applicable where refund is for input taxes for exports.

[Ganeshan Kalyani]

Sir, the relevant provision from draft GST Model is reproduced below for your ready reference.

(2) Subject to the provisions of sub-section (8), a taxable person may claim refund of any unutilized input tax credit at the end of any tax period:

Provided that no refund of unutilized input tax credit shall be allowed in cases other than exports or in cases where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on outputs:

Provided further that no refund of unutilized input tax credit shall be allowed in cases where the goods exported out of India are subjected to export duty.

Thanks.

[CSSANJAY MALHOTRA]

Dear Friends,

In GST, Exports are Zero rated, which means that if tax is payable (IGST leviable on exports), the same will be claimed as refund from the department.Department has to come out with Rules under GST, wherein the provisions as to Export under Bond will also be taken care of. Wait and watch for same.

[Ganeshan Kalyani]

Sir, whether really the export under bond provision will form part of GST Law. If they say that first pay the tax and then get refund in such case it seems less possibility that such provision will be inserted. Thanks.

[CSSANJAY MALHOTRA]

Dear Friends,

In continuation to my earlier response on Exports under Bond, please refer to the Draft Invoice Rules released recently by Board, wherein it is stated that Export Invoice to have mention of phrase "SUPPLY MEANT FOR EXPORT ON PAYMENT OF IGST” or “SUPPLY MEANT FOR EXPORT UNDER BOND WITHOUT PAYMENT OF IGST"

AI Summary

Zero-rated exports permit no tax and allow input tax credit, raising questions on refund versus export-under-bond procedures. Exports are to be treated as zero-rated supply, meaning no tax on exported goods or services while input tax credit related to those exports is admissible; the Model GST allows refund of unutilized input tax credit for exports. Uncertainty remains whether exporters may elect to export without payment of tax or must pay and claim refund, and administrative rules (including invoice wording and certification requirements concerning passing on of tax benefits) are needed to clarify export-under-bond and refund procedures.