2019-09-29 20:12:20GST CenterEnglishDeemed Export under GST means when goods produced in India do not leave the country & the payment for such goods is received in rupeeshttps://quickbooks.intuit.com/in/resources/gst-center/deemed-export-under-gst/What Is Deemed Export Under GST?

What Is Deemed Export Under GST?

7 min read

As per section 147 of the CGST Act 2017, supplies are considered Deemed Export under GST if they meet the following two conditions:

  • Supplies include goods and not services manufactured in India. Further, the goods produced do not leave India.
  • Payment with regards to such supplies is received in Indian rupees or in convertible foreign exchange

Deemed exports are separate from zero rated supplies. Such exports do not form part of zero rated supplies by default. As a result, supplies categorized as deemed exports are liable to taxes. This means that such supplies are made by paying IGST and are not supplied based on a bond or Letter of Undertaking (LUT).

Further, the refund for tax paid on supplies considered as deemed export under GST is claimed either by the supplier or the recipient. Accordingly, the application for claiming such a refund is to be filed either by the supplier or the recipient of such deemed exports.

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Goods Considered As Deemed Exports

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Following are the categories of supply of goods that are considered as “deemed exports” under section 17 of the CGST Act, 2017:

  • Supply of goods by a registered person against Advance Authorization
  • Capital Goods supplied by a registered person against EPCG (Export Promotion Capital Goods) Authorization
  • Goods supplied by registered person to an export oriented unit (EOU)
  • Gold supplied by a bank or public sector undertaking against Advance Authorization

Now, to understand the above categories of supplies, lets understand the meaning of the following terms:

Advance Authorization

It refers to an authorization issued by the Director General of Foreign Trade (DGFT) under Foreign Trade Policy. Such an authorization relates to import or domestic procurement of inputs on pre-import basis for physical exports.

The “Pre-import” condition means that the raw material imported under Advance Authorization is utilized to produce finished goods manufactured in India. Such imported goods are finally exported. This condition has been removed by the government recently.

Export Promotion Capital Goods

This refers to an authorization with regards to import of capital goods for physical exports. Such an authorization is issued by the Director General of Foreign Trade under Foreign Trade Policy (FTP).

Export Oriented Unit

Export oriented unit includes:

  • Export Oriented Unit (EOU)
  • Electronic Hardware Technology Park Unit (EHTP)
  • Software Technology Park Unit (STP)
  • Bio-Technology Park Unit (BTP)

Such units are approved under FTP.

GST Refund Process For Deemed Export Supplies

According to rule 89 of CGST Act, 2017, the recipient or the supplier of deemed export supplies can claim refund of tax paid on such supplies. Following is the process for claiming GST refund in case of deemed export supplies:

1. Intimation in Form A

The recipient EOU/EHTP/STP/BTP of deemed export supplies needs to give a prior intimation in Form A. This form showcasing a running serial number includes:

  • the goods to be procured that are pre-approved by the Development Commissioner and
  • Information regarding supplier

Such an intimation needs to be provided before the deemed export supplies are made. Further, the recipient needs to provide the intimation to the:

  • registered supplier
  • the jurisdictional GST officer in charge of such registered supplier
  • jurisdictional GST officer of the recipient

2. Issue of Tax Invoice

Persons Liable To File Refund Application in Case of Deemed Export Supplies

After such an intimation, the registered supplier supplies the goods and issues a tax invoice to the recipient (EOU/EHTP/STP/BTP unit).

3. Send Invoice Copies

On receiving the supplies, the EOU/EHTP/STP/BTP unit approves the tax invoice and sends a copy to:

  • registered supplier
  • the jurisdictional GST officer in charge of such registered supplier
  • jurisdictional GST officer of the recipient

The tax invoice thus approved is treated as a proof of deemed export supplies made by the registered person to EOU/EHTP/STP/BTP unit.

4. Maintain Records

The recipient EOU/EHTP/STP/BTP unit is required to maintain records of deemed export supplies in digital form. This is done based on the data elements forming part of Form B. Although, the elements contained in Form B are necessary, the recipient units can add additional data fields based on their requirement. Further, the recipient units are required to enter data accurately without any delay. This needs to be done as soon as the goods are received, utilized or removed from the unit.

Such digital records should be up to date, accurate and complete. Further, such records must be available for verification by the concerned officer at all times. In addition to this, a digital copy of Form B needs to be given to the jurisdictional GST officer by the 10th of every month.

Persons Liable To File Refund Application in Case of Deemed Export Supplies

As per the rule, the application for refund in case of deemed exports can be filed either by the recipient or the supplier of the deemed export supplies. However, the supplier of deemed exports can file the refund application in situations where:

  • recipient does not take the benefit of input tax credit on such supplies and
  • the recipient gives an undertaking that claims that the supplier can take such refund

As per rule 89 (4A) of CGST Rules 2017, there are cases where the supplier of deemed export supplies has availed the benefit of tax credit in respect of such supplies. In such a case, the recipient of deemed export supplies can claim the refund of ITC in respect of other inputs or input services.

Such inputs or input services are used in making zero rated supplies of goods or services. Furthermore, these supplies are other than the ones on which the supplier has already availed the benefit.

Also, Rule 96(9) of the CGST Rules 2017 states the scenario where the recipient of deemed export supplies cannot export by paying IGST. This takes place only when the supplier of deemed export supplies has already availed the benefit of tax credit.

Time Limit For Filing the Refund Claim

Both the recipient or supplier of deemed exports supplies are required to file an application for refund in Form GST RFD-01. This is done via the common portal either directly or through a Facilitation Centre suggested by the Commissioner.

Such an application needs to be filed before the expiry of two years from the time the return with regards to such deemed export supplies is filed electronically. Furthermore, the refund application must be filed along with a statement which contains the number and the date of invoices. Lastly, the applicant needs to give other evidence as required for filing the refund application.

Thus, to understand the concept of Deemed Exports under GST and who can file for refund, here is an infographic “Deemed Exports Under GST”.

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DEEMED EXPORTS UNDER GST

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Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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