Meeting with Commerce & Industry Minister Exports issues after GST

Duty Drawback not available for IGST Drawback limited to incidence of duties of Customs on inputs used and remnant Central Excise Duty on specified petroleum products used for generation of captive power for manufacture or processing of export goods Drawback does not cover GST or compensation cess paid on input, input services or capital goods No upfront exemption for procurements for exports High impact and disruption for small / unregistered exporters (for GST) and composition dealers Registration under normal scheme mandatory with attendant compliance requirements No credit nor refund nor duty drawback otherwise available to them of GST on the inputs, input services or capital goods Drawback may be allowed for unregistered exporters and composition dealers without requirement for registration (normal)

Refund module not enabled in GSTN Refund provisions not enabled in GSTN GST drawback not allowed – only refund of GST paid or rebate of GST on inputs allowed No GST exemption for procurements for exports Heavy and indefinite blockage of working capital of exporters in GST paid by them ITC refund only upon grant of credit which is linked to filing of returns So technically refund enablement will also require return modules to be enabled

Deemed Exports not notified ‘Deemed Exports’ are to be notified under section 147 of the CGST Act, 2017 No notification issued so far As per Explanation to section 54, ‘refund’ includes refund of tax on the supply of goods regarded as deemed exports Provisional refund provisions available to zero-rated supplies also to be extended to deemed exports Deemed exports to be treated at par with supplies to SEZs

Benefits curtailed under Duty Credit Scrips Benefits under Advance authorization scheme, EPCG scheme and duty credit scrips such as MEIS and SEIS restricted only to Basic Customs Duty, Safeguard Duty, Transitional Product Specific Safeguard Duty and Anti-dumping Duty. CVD exemption available only for items specified in the Fourth Schedule to the Central Excise Act, 1944 (specified petroleum products, tobacco etc.) No exemption from IGST / GST under the said Schemes. IGST is required to be paid. High impact on service exporters and software exporters who import capital goods Software companies primarily import capital goods such as servers, computers and networking devices, No refund of IGST nor utilization possible in respect of their capital goods’ imports

GST v. SEZs Compulsory registration of SEZ mandated for GST 4/25/2018 GST v. SEZs Compulsory registration of SEZ mandated for GST Reverse charge liability of SEZs on procurements from DTA not waived. Utilisation of ITC may be difficult and refund provisions not clear. Special fiscal provisions applicable to SEZs to be extended to cover GST by amendment to the SEZ Act GST Council has decided that Integrated GST (IGST) on high sea sale (s) transactions of imported goods, whether one or multiple, shall be levied and collected only at the time of importation. A similar dispensation may be extended to similar transactions in Special Economic Zones (SEZs). Copyright (c) 2016. Lakshmikumaran & Sridharan / Confidential.

EOUs v. SEZs EOU is like any other normal supplier under GST Registration and all other provisions of the GST Law apply with no exception Only benefit of Basic Customs Duty exemption on imports to continue Deeming fiction of job-work as service under GST will mean DTA clearances of goods will also be subject to restrictions as applicable for services EOUs may either be treated at par with SEZ units or at least notified under Deemed Exports

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