Dear Sir,
We have received advance for export order. Now order got cancelled. We are refunding partial amount to them. And partial deduction as recovery charges.
While Bank says, you need to refund full amount. As per policy, We can refund before 1 year without approval of RBI.
How to treat this in accounts and gst?
Is there any implication from RBI if export order got cancelled?
Company Faces Dilemma on Refund Policy: GST Not Applicable on Retained Amount as No Supply Occurred, Says Expert A company received an advance payment for an export order that was later canceled. They plan to refund part of the amount, retaining a portion as recovery charges. The bank insists on a full refund as per policy, which allows refunds within a year without RBI approval. The company seeks advice on accounting and GST implications. One respondent clarifies that GST is not applicable on the retained amount due to the absence of supply and suggests treating it as a zero-rated export supply, provided a Letter of Undertaking (LUT) was executed. (AI Summary)
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