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GST on Exports in India – A Complete Guide for Exporters Share The government of India implemented the Goods and Services Tax …
The government of India implemented the Goods and Services Tax law on 1st July 2017, and with the implementation of the Goods and Services Tax (GST), the country’s indirect tax system underwent a revolutionary change. For exporters, GST brought clarity, consistency, streamlined compliance, and some new challenges. This guide explores the extensive impact of GST on exports, detailing zero-rating mechanisms, refund options, schemes, and special provisions for SEZs, EOUs, and more.
GST on Exports in India – A Complete Guide for Exporters Share The government of India implemented the Goods and Services Tax …
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Latest GST Rates in India for Goods & Services Understanding the latest GST rates is essential for businesses and consumers alike. The …
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Goods and Services Tax (GST) is a comprehensive, multi-stage, destination-based indirect tax that replaced various indirect taxes like excise duty, VAT, Sales Tax, and service tax. As per the GST Law in India Intra intra-state transactions attract CGST and SGST, while interstate transactions attract IGST. The major objective of introducing the Goods and Services Tax is to eliminate the cascading effect and ensure uniformity in the taxation system across the country.
In General parlance Exports means supply of goods or service outside India. Section 2(5) of IGST Act 2017 define the export as “taking goods or service out of India to a place outside India”. As per Section 7 of the IGST Act, Export or import of Goods or services are considered Interstate supplies.
Key Requirement for Export and Import:
Import Export Code (IEC code): Section 7 of THE FOREIGN TRADE (DEVELOPMENT AND REGULATION) ACT, 1992 mandates Import Export Code (IEC Code) for the purpose of Import and Export of any goods or services. Import Export Code granted by Director General of Foreign Trade.
Learn more about what is Import & Expert Code…
GST will not be levied on export of any goods or services as Export of goods or services classified as Zero Rated supply under GST Law but exporters can still claim Input Tax Credit (ITC) on inputs used to produce the exports. Exporter has two option to export of goods or service
In this option, the exporter applies for a Letter of Undertaking (LUT) on the GST portal. Once the LUT is approved, the exporter can export goods or services without paying GST. However, GST paid on purchases (input tax) can be claimed as a refund by filling RFD-01. This helps exporters avoid paying GST on outward supplies while still recovering the GST paid on inputs.
In this case, the exporter pays Integrated GST (IGST) on the exported goods or services. The input tax credit (ITC) is used to offset the tax liability. After the export is completed, the exporter can claim a refund of the IGST paid by filling form RFD-01 on the exported goods or services.
A merchant exporter means the exporter who does not manufacture goods but procures goods from the open market in India and sells such goods overseas market. Provision related to merchant exporter explained in “Notification no 41/2017 Integrated Tax Rate”. As per this Notification following conditions should be satisfied
A Duty drawback is provided under the earlier law for the tax paid on input for the export of goods. Under GST, duty drawback would only be available on the customs duty paid on the import of goods that are used in the export of goods, or excise duty paid on petroleum products or tobacco products used as input or fuel in the export of goods.
Foreign Trade Policy defines Deemed export to a transaction in which goods supplied do not leave India and payment realized either in indian currency or free foreign exchange, but are still treated like exports under GST for refund purposes. Notification number 48/2017 – Central Tax dated 18.10.2017 declared the following supply of goods as Deemed export.
Meaning of Special Economic Zone: SEZ is a zone that is located in Indian territory, but for tax purposes, it is treated as foreign territory. As per the IGST Act 2017, Supply of goods or services to Special Economic Zones (SEZs) is also treated as a zero-rated supply hence, Suppliers can:
Supplies from the Special Economic Zone (SEZ) to DTA (Domestic Tariff Area) are treated as imports and attract duties.
GST simplifies exports by zero-rating them, allowing credit refunds, and improving logistics with e-way bills. Exporters must carefully choose between LUT/Bond and IGST refund routes based on their cash flow needs. Additionally, compliance and proper documentation are essential to claim refunds smoothly.
When it comes to GST on exports, proper compliance and timely refunds matter the most. At E Accountax Manager, we offer expert support for exporters, from IEC code registration to GST filing and refund claims. Our experienced team ensures smooth documentation, quick responses, and complete guidance, helping you focus on growing your export business stress-free.
Learn more about Latest GST Rates in India for Goods & Services…
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CA Ankit Agarwal is a seasoned GST expert, dedicated to sharing in-depth knowledge on GST laws, tax compliance, and business regulations, helping businesses and individuals navigate India’s evolving taxation landscape with ease.
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GST on Exports in India – A Complete Guide for Exporters Share The government of India implemented the Goods and Services Tax …
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