BY CA RITESH R. MEHTA B. COM, FCA, DISA Mobile No - 9822472744 EXPORT UNDER GST BY CA RITESH R. MEHTA B. COM, FCA, DISA Mobile No - 9822472744

BACKGROUND OF TAXATION GST is a destination based tax on consumption of goods or services. It is also the policy of the Government of India to export the goods and/or services not the taxes out of India. This makes the exports cheaper and thus Indian products or services will be more competitive in the international markets. BACKGROUND OF TAXATION By CA Ritesh Mehta 9822472744

DEFINITION By CA Ritesh Mehta 9822472744

INDIA Means The territory of the Union as referred to in clauses (2) and (3) of Article 1 of the Constitution; its territorial waters, continental shelf, exclusive economic zone or any other maritime zone as defined in the Territorial Waters, Continental Shelf, Exclusive Economic Zone and other Maritime Zones Act, 1976 (80 of 1976); the seabed and the subsoil underlying the territorial waters; the air space above its territory and territorial waters; and the installations, structures and vessels located in the continental shelf of India and the exclusive economic zone of India, for the purposes of prospecting or extraction or production of mineral oil and natural gas and supply thereof; DETAILED ANALYSIS Supply made to Jammu & Kashmir cannot be called as export of goods /services as Jammu & Kashmir is a part of India. India includes SEZ, EOU, FTZ etc By CA Ritesh Mehta 9822472744

DETAILED ANALYSIS OF INDIA Installations, structures and vessels located in the continental shelf of India and the EEZ For the purposes of prospecting or extraction or production of mineral oil and natural gas and supply thereof India For other purpose Not India DETAILED ANALYSIS OF INDIA By CA Ritesh Mehta 9822472744

EXPORT OF GOODS Means taking goods out of India to a place outside India. DETAILED ANALYSIS Similar to the definition of Export as defined under Customs Act. In case of Export of Service, it is prerequisite that payment against services rendered must be in convertible foreign exchange but at the same time such condition do not exist in case of export of Goods. Realization of Foreign Exchange Governed by Consequences of Non Compliance Time Limit Export of Goods FEMA Act Pay Penalty No Tax Within 6 months Export of Services GST Act Pay Tax No Penalty No time limit By CA Ritesh Mehta 9822472744

DETAILED ANALYSIS In case of Export of Service, it is prerequisite that payment against services rendered must be in convertible foreign exchange but at the same time such condition do not exist in case of export of Goods. If a service is not an export of service under GST law then IGST shall require to be charged even if the place of supply is outside India and location of receiver is also outside India. EXPORT OF SERVICES Means any supply of service satisfying the following conditions- The supplier of service is located in India The recipient of service is located outside India The place of provision of the service is outside India The payment for such service has been received by the provider of service in convertible foreign exchange The supplier of service and recipient of service are not merely establishments of a distinct person Particular Service Tax GST Export of Service Not Taxable Not an Export of Service Taxable if POP is in India Not taxable if POP is outside India Taxable even if POS is outside India By CA Ritesh Mehta 9822472744

COMPARISION OF EXPORT OF SERVICES Export of service – Finance Act 1994 Export of service – GST Act 1 The provider of service is located in the taxable territory The supplier of service is located in India 2 The recipient of service is located outside India including Jammu & Kashmir The recipient of service is located outside India 3 The service is not a service specified in the section 66D (Negative List) of the Act - 4 The place of provision of the service is outside India 5 The payment for such service has been received by the provider of service in convertible foreign exchange 6 The provider of service and recipient of service are not merely establishment of a distinct person in accordance with item (b) of Explanation 2 of clause (44) of section 65B of the Act The supplier of service and recipient of service are not merely establishments of a distinct person Vs By CA Ritesh Mehta 9822472744

ZERO RATED SUPPLY DETAILED ANALYSIS It does not mean that the goods & services have a 0% rate of tax, but the recipient to whom the supply is made is entitled to pay 0% GST to supplier. The concept of zero rated supply is there in the VAT laws with the credit benefit & refund. Also in Central Excise Law, there is rebate mechanism & refund of unutilised credit is available under the CCR, 2004 to the exporter of goods / services. 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. Supply to/by SEZ developers/unit will be treated as an inter-State supply. Means any of the following supply of goods/services or both namely Export of goods/services or both; or Supply of goods /services or both to a SEZ developer or a SEZ unit Zero Rated Supply Export of goods/services Actual Export Supply of goods /services to a SEZ developer or an SEZ unit Deemed Export By CA Ritesh Mehta 9822472744

TAXABILITY of ZERO RATED SUPPLY By CA Ritesh Mehta 9822472744

OPTION OF REFUND OF TAXES Option of refund of taxes for the taxable person exporting goods and/or services Option 1 Export goods and/or services under bond without Payment of IGST and claim refund of unutilized input tax credit Option 2 Payment of IGST by debit to electronic credit ledger (but without collecting tax from the recipient)and claim refund of IGST so debited DETAILED ANALYSIS All the refund is subject to verification of concept of unjust mechanism. Care must be taken to not to include the refundable amount in the price charged to the overseas customer. No such mechanism for Bond/Refund options for export of services under service tax law. Now, under GST Act, an assessee providing export of service shall be required either to claim refund or file bond as may be prescribed. This will be a major hardship for service providers whose major revenue is from export of services. By CA Ritesh Mehta 9822472744

ILLUSTRATION OF OPTION OF REFUND OF TAXES Actual Export Option 1 Option 2 ABC from Chennai supplies goods required by PQR in Delhi to exports to Germany ABC to charge IGST (Rs.100) to PQR PQR to avail input tax credit PQR to issued invoice for €15 PQR to ensure no IGST is charged in the Euro invoice PQR to claim refund of input tax credit of Rs.100 being maximum amount related to the outward export supply ABC to charge IGST (Rs.100) to PQR PQR to issued, invoice for €15 & to ensure no IGST is charged in the Euro invoice But, PQR to debit electronic credit ledger with IGST applicable of Rs.180 on the export. PQR to claim refund of Rs.180 debited in electronic credit ledger in respect of export By CA Ritesh Mehta 9822472744

ILLUSTRATION OF OPTION OF REFUND OF TAXES Deemed Export Option 1 Option 2 ABC from Hyderabad supplies goods required by PQR in Kolkata for supply to XYZ in Kolkata-SEZ (for use in authorized operations) ABC to charge IGST (Rs.100) to PQR PQR to avail input tax credit PQR to supply goods to XYZ (SEZ) for Rs.1500 PQR to ensure no IGST is charged in invoice to XYZ PQR to claim refund of input tax credit of Rs.100 being maximum amount related to the supply to XYZ (SEZ) · ABC to charge IGST (Rs.100) to PQR PQR to issued invoice to XYZ (SEZ) for Rs.1500 PQR to ensure no IGST is charged in invoice to XYZ But, PQR to debit electronic credit ledger with IGST applicable of Rs.270 on the export PQR to claim refund of Rs.270 debited in electronic credit ledger in respect of supply to XYZ (SEZ) By CA Ritesh Mehta 9822472744

ILLUSTRATION OF OPTION OF REFUND OF TAXES Purchase 100 GST 12 Invoice Price 112 150 18 Net Sales Price Sales 132 Net Profit 38 32 Refund Gross Profit 50 By CA Ritesh Mehta 9822472744

RELEVANT DATE FOR FILING OF REFUND APPLICATION OPTION I Situation for claiming refund Relevant date Refund of unutilized input tax credit on account of zero rated supplies without payment of any tax End of the FY in which such claim for refund arises Eg. The Unutilised Input Tax Credit has to be carried forward till the end of the F.Y i.e 31/03/2018 and then refund has to be claimed

RELEVANT DATE FOR FILING OF REFUND APPLICATION OPTION II Situation for claiming refund Relevant date Refund in case of zero rated supplies of goods on payment of integrated tax or the inputs or input services used in such goods Export of goods by sea or air Export of goods by land Export of goods by post Date on which the ship/ aircraft leaves India Date on which the goods pass the frontier Date of dispatch of goods by Post Office

RELEVANT DATE FOR FILING OF REFUND APPLICATION OPTION II Situation for claiming refund Relevant date Refund in case of zero rated supplies of services on payment of integrated tax or the inputs or input services used in such services Supply of services has been completed prior to the receipt of payment of such services Supply of services has been completed after the receipt of payment for such services -Date of receipt of payment in convertible foreign exchange -Date of issue of invoice

WHICH OPTION IS BENEFICIAL??? By CA Ritesh Mehta 9822472744

THANK YOU….! CA Ritesh R. Mehta 9822472744 B. COM, FCA, DISA I hope you enjoyed my presentation. CA Ritesh R. Mehta 9822472744 B. COM, FCA, DISA