Opinions

Export of Goods/Services

Basics

Exports will be treated as zero rated supplies. No tax will be payable on exports of goods or services.

As defined under IGST law, a “Zero Rated Supply” means any of the following supply of goods/services namely

  • Export of goods/services; or
  • Supply of goods /services to a SEZ developer or an SEZ unit

Supplier of zero rates goods/services can claim credit of input tax irrespective of the fact that such services/goods are notified as exempted supplies. Further, it is important to note that incase a service is not an export of service under the definition of export of services, then GST shall be chargeable since there is no exemption as such.

A registered person making zero rated supply shall be eligible to claim refund 30 under either of the following options, namely:-

  • He may supply goods or services or both under bond or Letter of Undertaking, subject to such conditions, safeguards and procedure as may be prescribed, without payment of integrated tax and claim refund of unutilised input tax credit; or
  • He may supply goods or services or both, subject to such conditions, safeguards and procedure as may be prescribed, on payment of integrated tax and claim refund of such tax paid on goods or services or both supplied

Refund Procedure:

Application for refund shall be filed only after the export manifest or an export report, as the case may be, is delivered under section 41 of the Customs Act, 1962 in respect of such goods

The application under shall be accompanied by any of the following documentary evidences, as applicable, to establish that a refund is due to the applicant:

  • A statement containing the number and date of shipping bills or bills of export and the number and date of relevant export invoices, in a case where the refund is on account of export of goods;
  • A statement containing the number and date of invoices and the relevant Bank Realization Certificates or Foreign Inward Remittance Certificates, as the case may be, in a case where the refund is on account of export of services;
  • A statement containing the number and date of invoices as prescribed in rule Invoice along with the evidence regarding endorsement in case of supply of goods made to a Special Economic Zone unit or a Special Economic Zone developer;
  • A statement containing the number and date of invoices, the evidence regarding endorsement and the details of payment, along with 2 proof thereof, made by the recipient to the supplier for authorized operations as defined under the Special Economic Zone Act, 2005, in a case where the refund is on account of supply of services made to a Special Economic Zone unit or a Special Economic Zone developer:
  • A statement containing the number and date of invoices along with such other evidence as may be notified in this behalf, in a case where the refund is on account of deemed exports;
  • A statement in Annex 1 of FORM GST RFD-01 containing the number and date of invoices received and issued during a tax period in a case where the claim pertains to refund of any unutilized input tax credit where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies, other than nil rated or fully exempt supplies;
  • A Certificate in Annex 2 of FORM GST RFD-01 issued by a chartered accountant or a cost accountant to the effect that the incidence of tax, interest or any other amount claimed as refund has not been passed on to any other person, in a case where the amount of refund claimed exceeds two lakh rupees:

Where the application relates to refund of input tax credit, the electronic credit ledger shall be debited by the applicant in an amount equal to the refund so claimed.

  • In case of zero-rated supply of goods or services or both without payment of tax under bond or letter of undertaking , refund of input tax credit shall be granted as per the following formula:

Refund Amount = (Turnover of zero-rated supply of goods/Services) x Adjusted Total Turnover ÷ Net ITC

Grant of Provisional Refund:-

Provisional 90% of the refund shall be paid by the Proper Officer within 7 days of application, if he considers that prima facie refund is due to the applicant. The aforesaid provision is applicable subject to the following conditions:-

  • The person claiming refund has, during any period of five years immediately preceding the tax period to which the claim for refund relates, not been prosecuted for any offence under the Act or under an existing law where the amount of tax evaded exceeds two hundred and fifty lakh rupees;
  • The GST compliance rating, where available, of the applicant is not less than five on a scale of ten;
  • No proceedings of any appeal, review or revision is pending on any of the issues which form the basis of the refund and if pending, the same has not been stayed by the appropriate authority or court.

Forms for Refund:-

Name of Form Details
FORM GST RFD-01 Refund Application form
  • Annexure 1 Details of Goods
  • Annexure 2 Certificate by CA
FORM GST RFD-02 Acknowledgement
FORM GST RFD-03 Notice of Deficiency on Application for Refund
FORM GST RFD-04 Provisional Refund Sanction Order
FORM GST RFD-05 Refund Sanction/Rejection Order
FORM GST RFD-06 Order for Complete adjustment of claimed Refund
FORM GST RFD-07 Show cause notice for reject of refund application
FORM GST RFD-08 Payment Advice
FORM GST RFD-09 Order for Interest on delayed refunds
FORM GST RFD-10 Refund application form for Embassy/International Organizations

However, for electronic cash account, refund can be applied through Form GSTR-3, 4 or 7, wherever applicable.

Note that:- Supply to Jammu & Kashmir is not considered as Export of goods/Services.