Backdrop
Refund for exporters under GST regime have been made easy using electronic mode with meagre departmental interference. However, the challenges are many folds as one single error may stop system to process the refund claims. In this article, we have highlighted major points which an exporter would be required to ensure in his export documents and/or returns to have smooth processing of export refunds.
Under the GST regime Exports is contained in Section 16 of the IGST Act, 2017, wherein supplies of goods and services for exports have been categorised as ‘Zero Rated Supply’. Further implying that Exports could be made under any of the two options as stated herein below:
- Exports under Bond/ LUT without payment of IGST.
- Exports made with payment of IGST.
In reference to the above refund of IGST/ refund of Unutilised Input Tax credit is becoming a major concern for all export houses as these refunds would in turn leads to blockage of working Capital of the export houses. However, GST is all set/ being set to streamline the refund process. Further the refund procedure has been made easy by just filing an application form on the GST portal. In addition to this, specific attention has to be paid while filing of shipping bill and invoice, for the new automated refund procedure which is stated herein below:
| Exports under Bond/ LUT without payment of IGST | Exports with payment of IGST |
|---|---|
| The GST Invoices details should be mentioned in the shipping Bill with proper mentioning of Invoice No & Invoice Date. | For Exports made with payment of IGST, the Shipping Bill in itself is the Refund Application so Shipping Bill should be GST Compliant with proper mentioning of Invoice No. & Invoice Date. |
| Commercial Invoice information should be provided in shipping bill and if the commercial invoice is different from that of Tax Invoice details of both to be provided. | Commercial Invoice information should be provided in shipping bill and if the commercial invoice is different from that of Tax Invoice details of both to be provided. |
| Taxable Value should be mentioned against each item in the shipping bill. (To be mentioned wherein IGST details to be given) | Taxable Value and Tax Amount should be mentioned against each item in the shipping bill for processing the Refund Amount. (To be mentioned wherein IGST details to be given) |
| IGST payment status should be declared as ‘LUT’- Export under LUT/BOND along with furnishing of LUT No. & date. (To be mentioned wherein IGST details to be given) | GST payment status should be declared as ‘P’- Payment of IGST. (To be mentioned wherein IGST details to be given) |
Declaration in Tax Invoice under the two options
While going through the above, one must not forget the important points as stated herein below, to be taken into consideration while preparing the Tax Invoice under GST for Exports made under LUT/ Bond without payment of IGST.
- Name, address and GSTIN of the supplier.
- HSN code of goods/ accounting code of service
- Total value of supply of goods and services
- Taxable value of goods and service post discounts/abatements
- Address of delivery where the same is different from place of supply
- An endorsement stating that the “SUPPLY MEANT FOR EXPORT UNDER BOND WITHOUT PAYMENT OF IGST” /“SUPPLY MEANT FOR EXPORTS ON PAYMENT OF IGST” as applicable.
DBK declaration
Also to be noted that proper declaration also needs to be ensured while filing of Shipping Bill for availing the transition period drawback, by declaring in DBK001/DBK002 & DBK003 as applicable.
| Exports under Bond/ LUT without payment of IGST | Exports with payment of IGST |
|---|---|
| Valid Returns in Form GSTR-1. | Valid Returns in Form GSTR-1 and GSTR-3/3B should be filed. |
| Refund Application for claiming of unutilised input Tax Credit should be made in Form RFD-01 | For Refund of Tax paid on services exporter needs to file Form GST-RFD-1 |
| Bond or letter of Undertaking in Form RFD-11 has to be furnished. | No such requirement. |
Notes:
- The Export General Manifest should cover the number and date of shipping bills.
- When goods are not transported as per the specifications of E-way bill.
- Reconciliation between the GST Portal & Customs EDI System is a must for obtaining of IGST Refund. After furnishing of information regarding filing of Form GSTR-3/3B is received from the common portal, Customs EDI System will process the Refund Claim & the amount of IGST paid against each shipping bill shall be electronically credited to the Bank A/c.
- In addition to the aforesaid it is also to be noted that for availing Refund of IGST the Bank Account of the Exporter should be registered with customs before filing of shipping bills and the same is not required if the registration already exists for drawback purpose.
1 Notification No. 27/2017 – Central Tax dated 30.08.2017
BT Associates is a premier indirect tax consultant in kolkata, delivering high quality services to client in the area of indirect taxation.GST idea is a unit of BT Associates formed to share knowledge on stakeholders. We cover entire gamut form technical papers to recent development including it under GST
Founder Member
Bhaskar Thakkar
Chief Executive officer
BT Associates, India
thakkar@btassociate.com
Twenty years of experience in tax practice. Specialist in structuring & planning and tax optimization under indirect tax. Lead eastern India indirect tax practice of Ernst & Young in past.
