Deemed Export

[Guest]

We are STB manufacturer, we have an order from an overseas trading company who has picked up an order from Indian customer to manufacture and supply this product in India. My quetions as below.

1. Is it possible and is a legal transactions?

2. How is the billing is done, as I need to do USD billing to my customer (overseas trading company) and product need to be shipped to Indian company?

3. What is the tax structure for billing to Indian company ?

4. Can we call this Deemed export?

[YAGAY andSUN]

As per the para 8.1 of the FTP 2009-2014, Deemed Exports refer to those transactions in which goods supplied do not leave country and paymet for such supplies is received  either in India Rupees or in free foreign exchange.  Supply of goods as mentioned in para 8.2 shall be regarded as "Deemed Export" provided goods are manufactured in India.

 

[YAGAY andSUN]

If you fall the para 8.2, then you can issue an invoice on following basis:-

Bill to :- Foreign party in foreign currency

Ship to :- Indian party on delivery challan ( as you can't disclose the pricing of your customer's customer).

 

No VAT will be applicable, since it may fall under the category of Deemed Export.

AI Summary

Deemed export: bill overseas trader in foreign currency while delivering domestically; VAT generally not applicable. Deemed export occurs when goods manufactured in India are supplied within India and payment is received in Indian rupees or free foreign exchange; the supplier may bill the foreign intermediary in foreign currency, deliver to the Indian purchaser on a delivery challan, and VAT will generally not apply provided the transaction meets the regulatory conditions for deemed exports and required documentation is maintained.