Impact of GST on Exports of Goods & Services in India
The government of India has introduced the Goods and Services Tax (GST) across the country. This has been done to increase revenue and also make the whole taxation process more flexible. As exports and import trade ranks among the important revenue generators in the country, it remains to be seen who this new tax system has impacted the sector. As a trader, once you applied for it, you may want to know the different schemes available under the GST scheme, the tax filing and refund process and lots more. The government has already shared some notification regarding the same so that businesses get the information that they are looking for.
As per the GST council, the exports of goods and services has been considered as a zero-rated supply and so there will be no GST levied on such exports. As per the new GST scheme, the duty drawback will be provided for the customs duty paid on the goods that have been imported for the purpose of manufacturing goods that will be exported. In the same, duty drawback will also be provided on the central excise duty paid for certain imported tobacco and petroleum products that have been imported as fuel for captive power generation.
If you are an exporter who deals in zero-rated goods under GST, you will be able to claim a refund for zero-rated supplies. This will have two options:
- In case of the supply of goods or services that are prescribed under bond or Letter of Undertaking for the safeguard of the payment of integrated tax, refund of unutilized input tax credit will be made. In this case, the exporter can file a refund application on the GST portal or through the GST facilitation center.
- If the exporter is an agency of the United Nation or any embassy as specified in section 55 safeguards of GST may be prescribed. In that case, a refund can be claimed as specified under section 54 of the CGST Act. In this case, the shipping bill needs to be provided in order to claim the refund of the IGST paid.
The following documents are needed to claim a refund for exports under GST:
- The copy of the payment of duty
- The Copy of the invoice
- The document to show that the tax burden has not been passed on
- Other documents as prescribed by the government
Of late the influence of GST has not been very positive in the export sector. The export industry is facing problems to due to non-availability of refund on time. To address this issue, the GST council took the decision to make six-month tax exemption for exporters. Moreover, the exporters have been exempted from the heavy taxes. With all these measures, it is expected that the whole process will be streamlined soon.