Sectoral FAQs on Exports
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EXPORTS

 

Question 1: How are exports treated under the GST Law?

Answer: Under the GST Law, export of goods or services has
been treated as:
• inter-State supply and covered under the IGST Act.
• ‘zero rated supply’ i.e. the goods or services exported shall
be relieved of GST levied upon them either at the input
stage or at the final product stage.

Question 2: What will be the impact of GST on zero rating of
export of goods?

Answer: This will make Indian exports competitive in the international
market.

Question 3: Have the procedures relating to exports by manufacturer
exporters been simplified in GST regime?

Answer: Yes. The procedures relating to export have
been simplified so as to do away with the paper work and
intervention of the department at various stages of export.
The salient features of the scheme of export under GST regime
are as follows:
• The goods and services can be exported either on payment
of IGST which can be claimed as refund after the
goods have been exported, or under bond or Letter of
Undertaking (LUT) without payment of IGST.
• In case of goods and services exported under bond or
LUT, the exporter can claim refund of accumulated ITC
on account of export.
• In case of goods the shipping bill is the only document
required to be filed with the Customs for making exports.
Requirement of filing the ARE 1/ARE 2 has been
done away with.
• The supplies made for export are to be made under
self-sealing and self-certification without any intervention
of the departmental officer.
• The shipping bill filed with the Customs is treated as
an application for refund of IGST and shall be deemed
to have been filed after submission of export general
manifest and furnishing of a valid return in Form GSTR-
3 by the applicant.

Question 4: For merchant exporters, is there any change in
the Export Procedure under the GST regime?

Answer: The concept of merchant or manufacturer exporter
would become irrelevant under the GST regime. The
procedure in respect of the supplies made for export is same
for both merchant exporter and a manufacturer exporter.

Question 5: The supplies to a SEZ unit or SEZ developer are
treated as zero rated supplies in the GST Law. Then why there
is no specific mention in the GST Law about not charging of
tax in respect of supplies from DTA unit to a SEZ unit or SEZ
developer?

Answer: Yes, supplies made to an SEZ unit or a SEZ developer
are zero rated. The supplies made to an SEZ unit or a
SEZ developer can be made in the same manner as supplies
made for export:
• either on payment of IGST under claim of refund;
• or under bond or LUT without payment of any IGST.
Question 6: When a SEZ unit or SEZ developer procures any
goods or services from an unregistered supplier, whether the
SEZ unit or SEZ developer needs to pay IGST under reverse
charge or these will be zero rated supplies?

Answer: Supplies to SEZ unit or SEZ developer have been accorded
the status of inter-State supplies under the IGST Act.
Under the GST Law, any supplier making inter-State supplies
has to compulsorily get registered under GST. Thus anyone
making a supply to a SEZ unit or SEZ developer has to necessarily
obtain GST registration.

Question 7: How soon will refund in respect of export of
goods or services be granted during the GST regime?

Answer:
(a) In case of refund of tax on inputs used in exports:
• Refund of 90% will be granted provisionally within
seven days of acknowledgement of refund
application.
• Remaining 10% will be paid within a maximum
period of 60 days from the date of receipt of
application complete in all respects.
• Interest @ 6% is payable if full refund is not granted
within 60 days.
(b) In the case of refund of IGST paid on exports: Upon
receipt of information regarding furnishing of valid return
in Form GSTR-3 by the exporter from the common
portal, the Customs shall process the claim for refund
and an amount equal to the IGST paid in respect of each
shipping bill shall be credited to the bank account of
the exporter.

Question 8: Will export of goods to Nepal and Bhutan treated
as zero rated and thereby qualify for all the benefits available
to zero rated supplies under the GST regime?

Answer: Export of goods to Nepal or Bhutan fulfils the
condition of GST Law regarding taking goods out of
India. Hence, export of goods to Nepal and Bhutan will be
treated as zero orated and consequently will also qualify for
all the benefits available to zero rated supplies under the GST
regime. However, the definition of ‘export of services’ in the
GST Law requires that the payment for such services should
have been received by the supplier of services in convertible
foreign exchange.

Question 9: What is deemed export under GST Law?
Whether any supply has been categorized as deemed export by
the Government?

Answer: Deemed export has been defined under Section
2(39) of CGST Act, 2017 as supplies of goods as may be
notified under section 147 of the said Act. Under section 147,
the Government may, on the recommendations of the Council,
notify certain supplies of goods manufactured in India as
deemed exports, where goods supplied do not leave India,
and payment for such supplies is received either in Indian
rupees or in convertible foreign exchange. However,
till date, the government has not notified any supply as
deemed export.

Question 10: Whether the EOU scheme will continue to be in
operation in the GST regime and whether EOU is required to
take registration under the GST Law?

Answer: EOU is like any other supplier under GST and all the
provisions of the GST Law will apply. However, the benefit
of Basic Customs Duty exemption on imports will continue.

Question 11: What tax benefits will be available to EOU
scheme in GST regime?

Answer: The duty free imports under GST regime will be
restricted to Basic Customs Duty. Exemption from the additional
duties of Customs, if any, under section 3(1), 3(3)
and 3(5) of the Customs Tariff Act, 1975 and exemption from
Central Excise duty will be available for goods specified under
the fourth Schedule to the Central Excise Act. IGST or
CGST plus SGST will be payable by the suppliers who make
supplies to the EOU. The EOU will be eligible, like any other
registered person, to take Input Tax Credit of the said GST
paid by its suppliers.

Question 12: Whether supplies to or from EOU will be exempted
from GST?

Answer: No.
• Under the GST Law, IGST or CGST plus SGST will be payable
by the suppliers who make supplies to the EOU.
The EOU will be eligible to take Input Tax Credit of the
said GST paid by its suppliers.
• The supplies from EOU will not be exempted from GST,
except in the case of zero rated supplies defined under
section 16 of the IGST Act, i.e. supplies made by EOU in
the form of physical export or supplies to a SEZ Unit or
SEZ Developer for authorized operations.

Question 13: What procedure will be followed by EOU to
import goods without payment of Customs duty in the
GST regime?

Answer: To avail such import benefits, EOUs will have to follow
the procedure under the Customs (Import of Goods at
Concessional Rate of Duty) Rules, 2017.

Question 14: Whether an EOU can clear goods to another EOU
(inter-unit transfer)? And whether an EOU can send goods for
carrying out job work on such goods? In such situations, how
will be the tax liability be discharged?

Answer: Supply of goods from one EOU to another EOU will
be treated as any other supply under GST Law. An EOU can
send goods for job work as per section 143 of the CGST Act,
2017 and rule 45 of the CGST Rules, 2017 and the tax liability
shall be discharged accordingly.

Question 15: M/s XYZ is engaged in export of goods only
having exports of approx. Rs. 5 crores and no clearances for
home consumption are affected. M/s XYZ was not required to
be registered under Central Excise. Whether M/s XYZ would
be required to get itself registered under GST?

Answer: Yes, because exports have been treated as
inter-State supplies under IGST Law.

Question 16: We are engaged in the manufacture of
exempted excisable goods for export. We availed input stage
rebate used in the manufacture of exported goods. How
would our case be dealt under GST law if our supply remains
an exempt supply?

Answer: Under IGST law a person engaged in export of
goods which is an exempt supply is eligible to avail input
stage credit for zero rated supplies. Once goods are exported,
refund of unutilized credit can be availed under Section
16(3)(a) of IGST Act, 2017 and Section 54 of the CGST Act,
2017 and the rules made thereunder.

Question 17: We are merchant exporters dealing in various
products.As per current procedure, we purchase goods from
a particular factory against CT1/ARE1 so that no excise is levied
on us. After goods are exported, we provide proof of export
and Form H (for sales tax exemption) to the concerned factory.
How would GST impact us and what will be the process now?

Answer: Taxable event in the GST regime is supply of goods.
Exports being inter-State supply, you would be required to
obtain GST registration. The manufacturer would be supplying
you the goods on the payment of IGST or CGST and SGST/
UTGST as applicable. You may avail of input stage credit of the
tax paid on goods and services and export the goods under
bond/LUT. Unutilized credit can be availed as refund. Alternatively,
you may export the goods on payment of integrated
tax and refund of integrated tax would be available to you.

Question 18: I have stock of inputs, semi-finished goods and
finished goods on the date on which GST comes into force. But
I have no duty paying documents. How am I going to be compensated
for the taxes paid on the said inputs, semi-finished
goods, and finished goods before GST for the exports made
after GST is implemented?

Answer: A transition period of three months has been
provided for availing of drawback. For exports during this
period, higher rate of duty drawback (composite AIR) shall
be available subject to conditions that no ITC of CGST/IGST is
claimed, no refund of IGST paid on export goods is claimed
and no CENVAT credit is carried forward.

Question 19: I supply goods to SEZ units and developers. For
such supplies, presently drawback is available to the recipient
or to me (if recipient gives a disclaimer). What is status of such
drawback under GST regime?

Answer: There is no change except for the fact that if drawback
is claimed by DTA supplier, the claim needs to be filed
with the jurisdictional Customs Authorities.

Question 20: Whether an EOU can clear goods in DTA?

Answer: Yes, an EOU can clear goods in DTA in accordance
with the provisions laid in the Foreign Trade Policy.

Question 21: Will an exporter be required to pay GST in case of
goods procured from unregistered persons (including unregistered
job workers)?

Answer: In case of supply by an unregistered person (including
unregistered job workers), the registered person i.e., exporter
shall be liable to pay GST under reverse charge mechanism.
However the exporter can avail ITC of such GST paid and either
utilise the ITC or claim refund of the same.

Question 22: Is GST payable on Agency Commission earned by
buying agents of foreign buyers?

Answer: Yes. Since commission is received by agents in
India, and the place of supply of service is in India, GST will
be payable.


Transition of Export Promotion Scheme on
implementation of GST

Question 1: Will duty Drawback scheme continue under GST
regime? If yes, what will be the rates of Drawback?

Answer: Yes. Duty Drawback scheme with certain modifications
will continue under the GST regime. The changes in the
said scheme are as follows:
• The Drawback shall be available only of Customs duties
on imported inputs and Central Excise duty on items
specified in the Fourth Schedule to the Central Excise Act
1944 (specified petroleum products, tobacco etc.) used as
inputs or fuel for captive power generation.
• As an export facilitation measure, for the transition period
of 3 months, from July to September, 2017, Drawback
at higher composite rates will continue to be granted
subject to certain safeguards i.e. for claiming the higher
rate of drawback, the exporter has to make a declaration
and certificate is required that no Input Tax Credit (ITC)
of CGST/IGST is claimed, no refund of IGST paid on export
goods is claimed and no CENVAT credit is carried forward.
• In absence of such certification, drawback will be
restricted to the customs portion of drawback.

Question 2: Is Drawback at a higher All Industry Rate (AIR)
admissible if an exporter has not availed Input Tax Credit of
GST or refund of IGST paid on exported goods ?

Answer: No. After 30th September 2017, drawback will be
admissible only at lower rate determined on the basis of the
custom duties paid on the goods imported for supplying
goods for export.

Question 3: If an exporter has stock of GST paid inputs as well
as inputs from pre-GST period and if inputs from both lots
are used in export goods, what shall be Drawback on such
exports?

Answer: During the transition period upto 30th September
2017, exporters can avail drawback at higher rate subject to
the conditions that no Input Tax Credit (ITC) of CGST/IGST is
claimed, no refund of IGST paid on export goods is claimed
and no CENVAT credit is carried forward.

Question 4: Will brand rate of Drawback be admissible for
Central Excise duty and Service Tax in respect of exports
made prior to GST implementation, for which application is
filed after 1st July 2017?

Answer: For the exports made prior to 1st July 2017, application
for fixation of brand rate as per the Drawback
scheme under the earlier law (defined as ‘existing law’ in
section 2(48) of the CGST Act, 2017) can be filed even after
1st July 2017.

Question 5: Applications for fixation of brand rate used to
be filed with jurisdictional Commissioner of Central Excise
having jurisdiction over the factory where export goods were
manufactured. Under GST regime, will there be any change
regarding filing of application for fixation of brand rate?

Answer: With effect from 1st July 2017, applications for fixation
of brand rate shall be filed with the Commissioner of
Customs having jurisdiction over place of export of goods i.e
the port/Airport/ICD etc. where Shipping Bill was filed. This
shall be applicable even for exports made prior to 1st July
2017 for which application is yet to be filed. In case exports
are from multiple places, application shall be filed with the
Commissioner of Customs having jurisdiction over any one
of the places of export of goods.

Question 6: Is there also a change under the GST regime in
respect of filing of application for fixation of brand rate of
Drawback for supplies to SEZ units and SEZ Developers?

Answer: Prior to 1st July 2017, applications for fixation of
brand rate for supplies to SEZ units and SEZ Developers used
to be filed with the jurisdictional Commissioner of Central Excise.
With effect from 1st July 2017, applications for fixation
of brand rate will be required to be filed with the Commissioner
of Customs having jurisdiction over the principal place
of business of the DTA supplier. This shall be applicable even
for exports made prior to 1st July 2017 for which application
for fixation of brand rate is yet to be filed.

Question 7: On re-export of imported goods, drawback of all
duties paid at the time of importation was admissible earlier,
as per the rates prescribed in this regard. What will be the position
in respect of re-export made after 1st July 2017, of the
goods imported prior to 1st July 2017? After 1st July 2017, IGST
and Compensation Cess will also be payable on the imported
goods. If such imported goods on which IGST and Compensation
Cess were paid, are re-exported, whether Drawback of
IGST and Compensation Cess will also be granted?

Answer: Drawback under Section 74 of the Customs Act,
1962 is available for duties paid at the time of importation.
Therefore, whatever duties / taxes are paid at the time
of importation of goods, Drawback of the same will be
granted. Drawback of Basic Customs Duty plus Additional
Duty of Customs (CVD) plus Special Additional Duty (SAD)
paid on the goods imported prior to 1st July 2017 will be paid
even if the re-export is made after 1st July 2017. Similarly,
in respect of the goods imported after 1st July 2017, Basic
Customs Duty plus IGST plus Compensation Cess will be paid
and Drawback of all of these would be paid on re-export of such
imported goods.

Question 8: Under the GST regime, will benefit of exemption
from all duties available under Advance authorization
scheme, EPCG scheme and duty credit scrips such as Merchandise
Exports from India Scheme (MEIS) & Service Exports
from India Scheme (SEIS) will continue?

Answer:• After 1st July 2017, the benefits under all the said
schemes shall be restricted only to Basic Customs Duty, Safeguard
Duty, Transitional Product Specific Safeguard Duty
and Anti-dumping Duty in respect of goods leviable to IGST.
For items specified in the Fourth Schedule to the Central Excise
Act, 1944 (specified petroleum products, tobacco etc.)
exemption from Additional Duty leviable under Sections
3(1), 3(3) and 3(5) of the Customs Tariff Act, 1975 shall be
available.

Question 9: Under GST regime, can we get duty free benefit
(all duties exempted) if we import capital goods using EPCG
authorization?

Answer: Only basic customs duty will be exempted on imports
made under EPCG Authorization. The EPCG holder will
have to pay IGST on import of capital goods and take Input
Tax Credit.

Question 10: Can duty credit scrips such as Merchandise Exports
from India Scheme (MEIS) and Service Exports from
India Scheme (SEIS) be used for payment of GST?

Answer: No. MEIS and SEIS scrip can be used only for
payment of Basic Customs Duty or additional duties of
Customs on items not covered under GST for imports under
GST regime.

Question 11: What will be exemptions available for various authorizations/
scrips which have been issued prior to 1.7.2017
and remain unutilized on 1.7.2017?

Answer: No exemption under GST Law is provided. The EXIM
scrips under the export incentive schemes of chapter 3 of
FTP (for example MEIS and SEIS) can be utilised only for payment
of Customs duties or additional duties of Customs, on
items not covered by GST, at the time of import. The scrips
cannot be utilized for payment of Integrated Tax and Compensation
Cess. Similarly, scrips cannot be used for payment
of CGST, SGST or IGST for domestic procurements.


Note: Reference to CGST Act, 2017 includes reference to
SGST Act, 2017 and UTGST Act, 2017 also.


 
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