Advance Authorization and GST

[Kaustubh Karandikar]

XYZ Ltd. Importing raw material under ‘Advance Authorization’. These goods will be directly sent to PQR (Supporting manufacturer) to manufacture finished goods. These finished goods will be purchased by XYZ from PQR where PQR will be charging 0.1% GST since XYZ will be exporting these goods as merchant exporter. XYZ will be showing these exports as fulfillment of export obligation against Advance authorization against which the raw material was imported by them. Is this transaction correct?

AI Summary

XYZ Ltd. and PQR Must Include Each Other in Export Documents for GST Compliance Under Advance Authorization Scheme. XYZ Ltd. imports raw materials under an Advance Authorization and sends them to PQR, a supporting manufacturer, to produce finished goods. PQR charges 0.1% GST to XYZ, which exports these goods as a merchant exporter, fulfilling export obligations linked to the imported raw materials. Respondents in the discussion agree that the procedure is correct, provided XYZ includes PQR in their application and shipping documents. The process must comply with guidelines from the Directorate General of Foreign Trade (DGFT), ensuring all necessary endorsements and conditions are met for the Advance Authorization scheme.