In India, the export of goods and/or services is deemed as interstate supply and thus is subject to Integrated GST. However, as per the provisions made under the IGST law, the exported goods and services are considered as zero-rated supplies, thereby allowing the exporter to claim GST refund on their exports.
On the other hand, even though the supply of goods and services beyond national borders attract 0% GST, it is mandatory for an exporter to register under GST if his aggregate turnover exceeds GST threshold of 40 lakhs (20 lakhs for Special category states), as specified in notification number 10/2017- Integrated Tax.
Nevertheless, the said 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 avail these benefits, the benefits are subject to conditions as prescribed below
Eligibility Criteria to Claim GST Refund on Exports
Any registered taxable person, besides 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 fulfil the following conditions:
- Supplier is located in India.
- Recipient and the place of supply are located outside India.
- Payment for such 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 distinct person.
Exporting Goods and Services under GST
In order to avail the option of export without payment of IGST, the registered exporter is required to furnish a bond or Letter of Undertaking (LUT) prior to the export. The issuance of LUT validates the export process, establishing the export of goods within three months 15 days from the invoice date, while the payment for the same (in foreign currency) will be received within one year 15 days of the invoice date.
The exporter is required 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 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 given below:
- The supply goods and/or services is done under bond or LUT, without payment of IGST. In such scenario, the exporter can claim a refund of the unutilized ITC available for CGST, SGST and IGST
- The supply goods and/or services is done as per the prescribed procedure, along with the IGST payment. In such scenario, the exporter can claim a refund for the IGST paid on the supply.
Furthermore, 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.
Upon successful filing of these forms, the GSTN portal shares the received export details with the ICEGATE. For which, the details provided in attached documents and GSTR 1 is validated by the ICEGate system and the refund process is initiated.
As per the IGST Act, 90% of refund processing is done 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 provide the payment information with the GST Portal will send the details through SMS and e-mail with the taxpayers.
Documents to be attached
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 crucial documents that are essential 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 requirement of any separate 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 required to be filed u/s 41 and 42 of the Customs Act, before the departure of the conveyance carrying the goods. Commissioners have to ensure that export report/EGM is filed in prescribed time limits
Correction 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 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 follows:
- The tax paid on exports, which are indicated in table 3.1(a) or table 3.1(c) instead of table 3.1(b), in such case the appropriate corrections can be done in the subsequent 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 lesser 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.
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