Goods and Services Tax (GST) Refunds on Export

In India, the export of goods and/or services has reduced as interstate supply and thus is subject to Integrated GST. However, as per the rules made under the IGST law, the exported goods and services are considered as zero-rated supplies, hence allowing the exporter to claim GST refunds on their export.

On the other hand, even though the supply of goods and services beyond national borders attract 0% GST, it is compulsory for an exporter to register under GST if his aggregate turnover exceeds GST threshold of 40 lakhs (20 lakhs for Special category states), as mentioned in notification number 10/2017- Integrated Tax.

Nevertheless, the mentioned provision has been included under IGST law to promote and facilitate the growth of export in India. But, for an exporter to be able to get these benefits, the benefits are subject to conditions as given below

Required Eligibility To Claim GST Refunds On Export

Any registered taxable individual, except Input Service Distributor (ISD), Compounding Taxpayer, TDS Deductor and TCS Collector, can claim a refund for the taxes paid on exports, if the supplied goods and/or services fulfills the following conditions:

  • Supplier is located in India.
  • Recipient and the place of supply are located outside India.
  • Payment for this service has been received by the supplier in convertible foreign exchange.
  • Supplier of service and the recipient of service are not merely establishments of a different person.

Exporting Goods And Services Under GST

In order to get the option of export without payment of IGST, the registered exporter is required to give a bond or Letter of Undertaking (LUT) before the export. The issuance of LUT validates the export process, establishing the export of goods within three months 15 days from the invoice date, when the payment for the same (in foreign currency) will be received within one year 15 days of the invoice date.

The exporter need to submit the bond, supported by a bank guarantee of an amount not exceeding 15 per cent of the bond amount on a non-judicial stamp paper for each and every export. The validity of a LUT is for one year and is to be submitted on the company letterhead.

GST Refund Process For Exporters

An exporter can claim IGST refund for export as per one of the two options mentioned below:

  • The supply goods and/or services is done under bond or LUT, without payment of IGST. In such case, the exporter can claim a GST refunds on export of the not utilized ITC available for CGST, SGST and IGST
  • The supply goods and/or services is done as per the given process, along with the IGST payment. In such case, the exporter can claim a refund for the IGST paid on the supply.

Also, the exporters monthly GST returns should show export details, as given below:

  • Form GSTR 1: Export details in Table 6A of GSTR-1, along with “shipping bill” details of the IGST paid.
  • Form GSTR-3B: Valid details, relevant to the export period.

By successful filing of these forms, the GSTN portal shares the received export details with the ICEGATE. For which, the details given in attached documents and GSTR 1 is validated by the ICEGate system and the refund process is started.

As per the IGST Act, 90% of refund processing is completed within 7 days of filing refund application. The acknowledgement of the same is shared with refund payment is directly done to exporters the refund payment is credited to the account of the taxpayers, the ICEGATE system will give the payment information with the GST Portal will send the details through SMS and e-mail with the taxpayers.

Documents Need To Attach For GST Refunds On Export

Shipping Bill:
For IGST refund claim, there is no need for the exporter to file any other refund application as the Shipping Bill (along with Export Manifest) is considered as a refund application.

Bank Realisation Certificate (BRC)/ Foreign Inward Remittance Certificate (FIRC):
The BRC or FIRC are very crucial documents that are required to support the refund claimed for the export of service. The exporter can get their BRC issued by their authorized bank on each invoice, while the FIRC is issued on any inward remittance received against an export. There is no need of any different application for refund of IGST paid on export of Goods.

Export General Manifest (EGM):
As per Instruction No. 15/2017-Customs, dated 09-10- 17, filing of an export manifest is must for treating shipping bill or bill of export as refund claim. The export report is filed in case of export by land and Export manifest is filed in case of export by air or sea. Export manifest is need to be filed u/s 41 and 42 of the Customs Act, prior to the departure of the conveyance carrying the goods. Commissioners have to ensure that export report/EGM is filed in given time limits.

Correction Made In Form GSTR -1

For any incomplete or erroneous filing of form GSTR 1, the exporter can file Table 9A – Amended Export Invoices in their subsequent GSTR 1 filing. In case of any missing invoice (in current GSTR 1), the exporter can report the same in Table 6A of Form GSTR -1 of the subsequent period.

Correction Made In Form GSTR -3B

As per the circular number 26/26/2017 issued by CBEC, corrections in Form GSTR-3B for a given tax period can be reported in subsequent GSTR-3B filing, as below:

  • The tax paid on exports, which are mentioned in table 3.1(a) or table 3.1(c) instead of table 3.1(b), in such case the needed corrections can be done in the coming month to the extent permitted.
  • The tax paid on exports has been mentioned as zero in table 3.1(b), the correct amount can be declared and offset during GSTR -3B filing of the subsequent month.
  • The tax paid on exports declared in table 3.1(b) is less than the return specified in the invoices filed under Table 6A, and Table 6B, of Form GSTR 1, differential amount of tax can be declared and offset during GSTR 3B filing of the subsequent month.

Contact us or email us at [email protected] for any further queries on GST filing and registration.

 

Introducing Online GST Refund Process in 2019 by GSTN

The GST Network (GSTN) has introduced an online GST refund process, as decided by the 37th GST Council. With this process, taxpayers will easily be able to file refund through form RFD 01, which can further be processed online by the GST officers. The online refund system is into effect from September 25, 2019, on the GST portal.

Major Points:

  • Taxpayers can now file refund application (in RFD 01 form) easily and tax officers can execute it online
  • All communications between taxpayers and tax officers will be online as well

GST Refund Process Of Previous Years

Till now, the refund processing for the Central GST (CGST) and State GST (SGST) was done by a single tax personal to whom the taxpayer was assigned administratively. However, the disbursement for this was done by different accounting authorities of central and state tax departments respectively. This makes a delay of sharing sanction order between accounting personals, before the GST refund could be processed to the applicant.

GSTN Refund Process 2019

The new GST refund system launched by GSTN has done away with multiple accounting authorities for sanctioning the disbursement of the refund amount. Under new refund system, when the tax officer completes processing, the sanctioned amount will get credited to the bank account of the Taxpayer through Public Fund Management System (PFMS). The new system is being introduced to provide a boost to the disbursement speed of refunds and also improve the GST compliance, hence making refund a seamless experience for the taxpayer as well as the tax officer.

However, it may be noted that all refund applications filed before September 26, 2019, will be processed manually as done under the old refund process.

Features Of The New GST Refund System

The unique features of the new refund system launched by GSTN are as below:

  • Single Authority based refund system
  • Stage-by-Stage tracking of the GST Refund process
  • SMS and Email Updates for Important stages
  • Online Reply Utility for Notices

Digitization Making GST Refund Process Simpler In The Coming Days

After-April 2020, with the enrolment of new GST returns, the taxpayer will be able to auto-populate the GST refund details from his sales records. These auto-populated fields will be derived from taxpayers ‘refund from sales to SEZ and Deemed Exports’ and ‘refund from sales to B2B, Exports and B2C’ records.

If the field for a refund from sales to SEZ and Deemed Exports is populated indicated ‘Yes’, the supplier will get the refund from such transactions else SEZ/Deemed Exporter.

Similarly, in case of transactions other than SEZ and Deemed Exports, if the document to be auto-populated to GST refunds is Yes then values will be auto-populated in refund form.

Contact us or email us at [email protected] in case of any queries related to GST registration.

Major Changes in GST Act which are applicable from Feb. 1st, 2019

On the proposal of all-ground-breaking GST Council, Government has presented GST Amendment Act, 2018 in August, 2018. The corrections presented through this Amendment Act are viable from February 1, 2019. Besides, based on proposal made by the GST Council, in last three gatherings, a few changes have likewise been presented. All such significant changes in GST law which are made powerful from February 1, 2019 are as per the following:

1. Threshold limit expanded for enrollment in specific States

As far as possible for required enrollment under GST has been expanded from Rs. 10 lakhs to Rs. 20 lakhs in the States of Arunachal Pradesh, Assam, Himachal Pradesh, Meghalaya, Sikkim and Uttarakhand. Therefore, Special class States under GST Act will currently bar the States of Arunachal Pradesh, Assam, Himachal Pradesh, Meghalaya, Sikkim and Uttarakhand.

2. Switch Charge if there should be an occurrence of supply gotten from Unregistered Persons

The arrangement as to require of GST under turn around charge, if products or administrations are gotten by an enrolled individual from any unregistered individual and the estimation of such supply in multi day surpasses Rs. 5,000, was conceded for the present by way an exception notice. The charging arrangements of Section 9(4) has been corrected and Government has been engaged to advise explicit classes of enlisted people who will be at risk to cover regulatory expense under turn around charge on supply of indicated merchandise and ventures.

3. Rationalization of Composition Scheme

The farthest point for selecting structure plot has been expanded from Rs. 1 crore to Rs 1.5 crores. Already, dealers and makers, who were likewise rendering administrations, were not qualified to select creation plot. Presently, according to new standards an enlisted provider of merchandise will be qualified for creation plot regardless of whether it is occupied with supply of administrations gave the estimation of such supply doesn’t surpass 10% of its turnover in the first monetary year in a State/Union Territory or Rs 5 lakhs, whichever is higher. The complete duty under arrangement demand will be at 1% (0.5% CGST + 0.5% SGST) of turnover of assessable supplies of good and administration in State or Union Territory.

4. Compulsory usage of IGST credit for installment of any tax

According to the new procedure, it would be required for a provider to use the credit of IGST first for installment of yield charge risk (IGST, CGST, SGST or UTGST), and the equalization of other ITC (CGST, SGST or UTGST) can be utilized just if parity of credit of IGST is totally depleted. This change can be comprehended with following precedent.

Particulars IGST CGST SGST
Output tax liability (A) 100 100 100
Available ITC (B) 200 50 50
Up to January 31, 2019
ITC utilized (C) 100 50 50
Balance ITC (D = B-C) 100 – –
Unpaid output liability (E = A – C) – 50 50
Utilization of IGST for payment of CGST/SGST – 50 50
Balance ITC – – –
Net Liability – – –
On or After February 1, 2019
Utilization of IGST for payment of IGST, CGST and SGST (C = B – A) 100 100 –
Utilization of SGST for payment of SGST (C = B – A) – – 50
Balance ITC (D = B – C) – 50 –
Unpaid output liability – – 50
Balance ITC – 50 –
Net Liability to be paid in cash – – 50

5. Mandatory enlistment by an online business administrator just in the event that it is at risk to gather TCS

Prior, an internet business administrator was required to take compulsory enrollment regardless of the way that whether it was required to gather TCS or not. With impact from February 1, 2019, the enlistment will be obligatory just for that web based business administrator who is required to gather TCS. According to Section 52 of the CGST Act, it is obligatory for a web based business administrator to gather the TCS on the off chance that it enables the outsider dealer to move products or administrations through its stage.

6. Single credit note can be issued for numerous solicitations

Prior, the provider was required to raise separate credit note for each receipt, which was badly designed and lumbering. Presently, the providers have been permitted to issue solidified credit note and charge note in appreciation of numerous solicitations issued in the equivalent money related year.

7. Registration to be suspended first before dropping

With impact from February 9, 2019, where any individual applies for dropping of his GST enrollment, his enlistment will be regarded to be suspended from the date of recording of use for wiping out. Amid the time of suspension, a sensible chance of being heard must be given to him by the experts previously supporting the crossing out of his enlistment. Amid the time of suspension, the provider will not gather GST on supply of merchandise or benefits and will not be required to document GST returns.

8. Relaxation from taking enrollment stretched out to providers who are rendering administrations through internet business administrators

With impact from February 1, 2019, a provider, who is providing administrations through internet business administrator, isn’t required to get enrollment if his absolute turnover amid the money related year doesn’t surpass Rs. 20 lakhs (Rs. 10 lakhs for extraordinary classification States). This unwinding is accessible just for provider of administrations and not for provider of merchandise.

9. Transfer of ITC to new enlisted spot of business of existing provider

Any enrolled individual, who has gotten isolated enlistment for different spots of business inside same State or UT, can exchange the credit of ITC from his current spot of business to his recently enlisted spot of business. The credit of existing business will be moved in extent to the estimation of advantages exchanged to the recently enlisted unit. For this reason, another Form ITC-02A has been presented.

10. No ITC of GST paid on engine vehicle with sitting limit of up to 13 people

Information charge credit will not be accessible for the GST paid in appreciation of traveler engine vehicles, with affirmed seating limit up to 13 people including driver. In any case, the info charge credit will be permitted if engine vehicle is utilized for further supply of such engine vehicles or transportation of travelers or granting preparing to drive such engine vehicles.

Further, the Input expense credit will not be accessible for the GST paid in appreciation of general protection, adjusting, fix and support of such engine vehicles, vessels or flying machine. In any case, the credit for the expense paid on these administrations will be permitted in following cases:

(a) If engine vehicles, vessels or flying machine are utilized for the reasons indicated above and ITC is permitted consequently

(b) If these administrations are gotten by an assessable individual occupied with:

♦ The assembling of such engine vehicles, vessels or flying machine

♦ Supply of general protection benefits in appreciation of such engine vehicles, vessels or flying machine safeguarded by them

11. Concept of ‘Business Vertical’ has been removed

The idea of acquiring separate enrollment for an alternate business vertical inside a similar State or UT has been excluded. Along these lines, more than one enlistment might be acquired in a similar State or UT for better places of business, regardless of whether these spots of business are occupied with providing distinctive arrangement of merchandise or administrations.

12. Relevant date changed for recording of utilization for GST Refund

The application for discount of expense ought to be made before expiry of 2 years from pertinent date. Prior, the significant date for recording of use for discount of unutilized ITC, because of transformed duty structure, was end of the budgetary year in which such case or discount emerges. Presently, the applicable date would be the due date for outfitting of return under segment 39 of CGST Act for the important period in which such discount guarantee emerges.

13. Time utmost for clearing GST test broadened

Any individual, who has been enlisted as GST professional, will be qualified to remain selected on the off chance that he passes GSTP examination inside a time of 30 months from the date of enrollment. Also, a GST specialist can now moreover play out the accompanying:

(a) Furnish data for e-way charge age,

(b) Furnish subtleties of challan as for data sources or capital products sent to work laborer

(c) Amend or drop the enlistment of records to be kept up by proprietor or administrator of godown or distribution center and transporters

(d) File application for profiting or quitting the creation plot.