Merchant Export

[THYAGARAJAN KALYANASUNDARAM]

Dear Experts,

A Manufacturer got an order from EPC Contractor in the same state but End- User in other country. EPC Contractor Placed order with one line item as "Supply and Erection" Means value not separated for both. If manufacturer making invoice with gst @ 0.1% as per merchant export rate, any tax issues will arise for future erection work?

Thanks In Advance.

[Rajagopalan Ranganathan]

Sir,

0.1% tax is leviable on goods only. In respect of erection service, since the same takes place in non-taxable territory no gst is leviable under GST Act. However, as per your information the value of the contract includes value of the service provided, that is, erection. Therefore you cannot pay 0.1% tax on the combined value of supply and erection. You have to provide value of supply of goods and service separately. for this purpose you can avail the service of a Charted Accountant or a Cost Accountant.

[THYAGARAJAN KALYANASUNDARAM]

Thanks a-lot sir.

AI Summary

Merchant export GST applies to goods only; separate service value on combined invoices to avoid incorrect tax treatment.
Merchant export rate applies only to the value of goods; erection services in a non taxable territory are not subject to GST. If a contract/invoice combines "supply and erection," the supplier must segregate the values and cannot apply the merchant export rate to the combined amount. Engage a chartered or cost accountant to determine and document the correct value allocation for compliance.