TaxTMI 
TaxTMI 
XYZ(Manufacturer) is supplying goods for export through PQR (Merchant Exporter). 1) In case of FOREX gain to PQR, XYZ will issue debit note to PQR to recover the same. 2) DBK amount received by PQR, will be transferred to XYZ 3) MEIS scrip will be transferred in the name of XYZ by PQR without any monetary benefit. Is XYZ liable to pay GST on all these transactions?
GST on benefits from merchant exporter
24 Jul 2019 
7 Replies 
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GST on export-related benefits: debit note recoveries taxable, scrip transfers nil-rated but ITC may require reversal.
Recovery of a foreign exchange gain by issuing a debit note is treated as a local taxable supply and attracts GST; duty drawback credited to the exporter is to be credited and adjustments between parties may attract GST when characterised as consideration; MEIS and similar duty credit scrips are presently nil-rated, so their transfer without monetary consideration does not attract GST, but any ITC claimed earlier in relation to supplies rendered exempt by such transfers must be proportionately reversed. (AI Summary)
Recovery of a foreign exchange gain by issuing a debit note is treated as a local taxable supply and attracts GST; duty drawback credited to the exporter is to be credited and adjustments between parties may attract GST when characterised as consideration; MEIS and similar duty credit scrips are presently nil-rated, so their transfer without monetary consideration does not attract GST, but any ITC claimed earlier in relation to supplies rendered exempt by such transfers must be proportionately reversed. (AI Summary)