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Definition of India in GST

Section 2 (56) of CGST Act, 2017 defines “India“, which means the territory of India as referred to
in article 1 of the Constitution, its territorial waters, seabed and sub-soil underlying such waters,
continental shelf, exclusive economic zone or any other maritime zone as referred to in the
Territorial Waters, Continental Shelf, Exclusive Economic Zone and other Maritime Zones Act,
1976 (80 of 1976), and the air space above its territory and territorial waters.

Meaning of Export & Import of Goods

Section 2 (5) defines of IGST Act, 2017 defines – “Export of Goods”, with its grammatical
variations and cognate expressions, means taking out of India to a place outside India.

Section 2 (10) defines of IGST Act, 2017 defines – “import of goods” with its grammatical
variations and cognate expressions, means bringing goods into India from a place outside
India.
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Export of Goods under GST?

As per IGST Act Section 2(5) Export of goods with its grammatical variations and cognate
expressions, means taking goods out of India to a place outside India. Export means trading or
supplying of goods and services outside the domestic territory of a country.
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All Exporters Need to Register ?

Exports being inter-State supply, All Exporters would be required to obtain GST registration
irrespective of threshold limit. (Sec 24 of CGST Act – Mandatory Registration). However, Importers
and exporters of goods, that are exempted from GST, do not need to obtain a GST registration
number and can clear their consignments by quoting PAN, the customs department said.Moreover ,
Supplier of services having turnover upto 20 lacs exempted for obtaining registration irrespective of
inter state supplies.
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Exports – Considered as Zero-Rated Supply:

The export of Goods and Services is considered as Zero Rated Supply. GST will not be levied on
exports. Zero-rated supply refers to items that are taxable, but the rate of tax is nil on their supplies
and – credit of input tax relating to them can be availed.

zero-rated supply refers to items that are taxable, but the rate of tax is nil on their input supplies.
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As per Sec 2(23) of IGST Act: “zero-rated supply” shall have the meaning assigned to it in section 16;

Sec 16. (1) of IGST Act : “zero rated supply” means any of the following supplies of goods or services
or both, namely:–

(a) Export of goods or services or both; or

(b) SEZ - Supply of goods or services or both to a Special Economic Zone developer or a Special
Economic Zone unit.

Zero-rated Supply – Input Tax Credit Allowed Sec 16. (2) of IGST Act : Subject to the provisions of
sub-section (5) of section 17 of the Central Goods and Services Tax Act, credit of input tax may be
availed for making zerorated supplies, notwithstanding that such supply may be an exempt supply.
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Difference between Exempted Supplies & Zero Rated Supplies:

Exempt Supply :

As per Sec 2(47) of CGST Act: “exempt supply” means supply of any goods or services or both which
attracts nil rate of tax or which may be wholly exempt from tax under section 11, or under section 6
of the Integrated Goods and Services Tax Act, and includes non-taxable supply;

There are three types of Exempted Supplies:

1. Nil Rate Supply -- The Tariff Rate is Nil

2. Wholly Exempt from Tax – Through a Notification
3. Non- Taxable Supply – Not in GST like – Alcohol for human Consumption & Five Petroleum
Products.
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Difference between Exempted Supplies & Zero Rated Supplies:

In case of exempted Supplies, since there is no tax charged on outward supply, the Input Tax
Credit is not allowed. Whereas Zero-rated supply refers to items that are taxable, but the rate of
tax is nil on their supplies and therefore, Input Tax Credit is allowed. However as per Sec 16. (2)
of IGST Act, Input Tax Credit is allowed for Exempted items also when they are exported.

Zero Rated Supply – Refund of Un-utilized Input Tax Credit or Refund of IGST Paid
on Such Exports

Exports can be made under Two Options Option –

1: Exports may be made under Bond or Letter of Undertaking without payment of integrated tax
(IGST) he may supply goods or services or both under 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

Option – 2: Exports may also be doneon payment of integrated tax 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, in
accordance with the provisions of section 54 of the Central Goods and Services Tax Act or the rules
made there under.
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Export Procedure under LUT

The goods and services can be exported either on payment of IGST or under bond or Letter of
Undertaking (LUT) without payment of IGST.

[Notification No. 16/2017-Central Tax, Circular Nos. 2/2/2017-GST and 4/4/2017-GST]

Option (A) Export without payment of IGST & Refund Claim of Accumulated ITC

> As per Rule 96A of the Central Goods and Services Tax Rules, 2017 ( The CGST Rules), any
registered person exporting goods or services without payment of integrated tax is required to
furnish a bond or a Letter of Undertaking (LUT) in FORM GST RFD-11.
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Furnishing of LUT & it’s Validity:

Eligibility to Export under LUT:

The facility of export under LUT has been now extended to all registered persons who intend to
supply goods or services for export without payment of integrated tax except those who have been
prosecuted for any offence under the CGST Act or the Integrated Goods and Services Tax Act, 2017
or any of the existing laws and the amount of tax evaded in such cases exceeds two hundred and
fifty lakh rupees.

Validity of LUT:

The LUT shall be valid for the whole financial year in which it is tendered.

Form for bond/LUT:

Till the time FORM GST RFD-11 is available on the common portal, the registered person (exporters)
may download the FORM GST RFD-11 from the website of the Central Board of Excise and Customs
(www.cbec.gov.in) and furnish the duly filled form to the jurisdictional Deputy/Assistant
Commissioner having jurisdiction over their principal place of business.
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Self-declaration :

Self-declaration to the effect that the conditions of LUT have been fulfilled shall be accepted unless
there is specific information otherwise. That is, self-declaration by the exporter to the effect that he
has not been prosecuted should suffice for the purposes of Notification No. 37/2017- Central Tax
dated 4 th October, 2017. Verification, if any, may be done on post-facto basis.

Time for acceptance of LUT/Bond:

As LUT/Bond is a priori requirement for export, including exports to a SEZ developer or a SEZ unit,
the LUT/bond should be processed on top most priority. It is clarified that LUT/bond should be
accepted within a period of three working days of its receipt along with the self-declaration as stated
in para 2(d) above by the exporter. If the LUT / bond is not accepted within a period of three working
days from the date of submission, it shall deemed to be accepted

Payments Made in Indian Currency :

It is clarified that the acceptance of LUT for supplies of goods to Nepal or Bhutan or SEZ developer
or SEZ unit will be permissible irrespective of whether the payments are made in Indian currency or
convertible foreign exchange as long as they are in accordance with the applicable RBI guidelines. It
may also be noted that the supply of services to SEZ developer or SEZ unit under LUT will also be
permissible on the same lines. The supply of services, however, to Nepal or Bhutan will be deemed
to be export of services only if the payment for such services is received by the supplier in
convertible foreign exchange.
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Refund Claim procedure of Accumulated ITC :

• In case of goods and services exported under bond or LUT, the exporter can claim

refund of accumulated ITC on account of export – Rule 96 A: Refund of Input Tax

Credit export of goods or services under bond or Letter of Undertaking.

• Any registered person availing the option to supply goods or services for export without

payment of integrated tax shall furnish, prior to export, a bond or a Letter of

Undertaking in FORM GST RFD-11 to the jurisdictional Commissioner, binding himself

to pay the tax due along with the interest

• The exporter claiming refund of unutilized input tax credit will file an application

electronically through the Common Portal, either directly or through a Facilitation

Centre notified by the GST Commissioner. The application shall be accompanied by

documents as prescribed in the said rules.

• 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.
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• The details of the export invoices contained in FORM GSTR-1 furnished on the

common portal shall be electronically transmitted to the system designated by Customs

and a confirmation that the goods covered by the said invoices have been exported out

of India shall be electronically transmitted to the common portal from the said system.

Manual filing of the Refund Claim:

Due to the non-availability of the refund module on the common port, C.B.E& C has issued

Circular No.17/17/2017 has been prescribed the following conditions and procedures are laid

down for the manual filing and processing of the refund claims:

1. The registered person may make zero-rated supplies of goods or services or both on

payment of integrated tax and claim refund of unutilized input tax credit in relation to

such zero rated supplies.

2. The application for refund of integrated tax paid on zero-rated supply of goods to a

Special Economic Zone developer or a Special Economic Zone unit or in case of zero-

rated supply of services is required to be filed in FORM GST RFD-01A by the supplier

on the common portal and a print out of the said form shall be submitted before the

jurisdictional proper officer along with all necessary documentary evidences as

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applicable within the time stipulated for filing of such refund under the CGST Act.

3. The application for refund of unutilized input tax credit on inputs or input services used

in making such zero-rated supplies shall be filed in FORM GST RFD-01A on the

common portal and the amount claimed as refund shall get debited in the electronic

ledger to the extent of the claim. The common portal shall generate a proof of debit

(ARN- Acknowledgement Receipt Number) which would be mentioned in the FORM

GST RFD-

4. 01A submitted manually, along with the print out of FORM GST RFD-01A to the

jurisdictional proper officer, and with all necessary documentary evidences as

applicable within the time stipulated for filing of such refund under the CGST Act.

5. The registered person needs to file the refund claim with the jurisdictional tax authority

to which the taxpayer has been assigned as per the administrative order issued in this

regard by the Chief Commissioner of Central Tax and the Commissioner of State Tax.

In case

6. such an order has not been issued in the State, the registered person is at liberty to

apply for refund before the Central Tax Authority or State Tax Authority till the

administrative mechanism for assigning of taxpayers to respective authority is

implemented. However, in the latter case, an undertaking is required to be submitted

stating that the claim for sanction of refund has been made to only one of the

authorities. It is reiterated that the Central Tax officers shall facilitate the processing of
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the refund claims of all registered persons whether or not such person was registered

with the Central Government in the earlier regime.

7. Once such a refund application in FORM GST RFD-01A is received in the office of the

jurisdictional proper officer, an entry shall be made in a refund register. Once

completion of verification of application and supporting documents in totality

ascertained, an acknowledgement in FORM GST RFD-02 shall be issued within 15

days from the date of filing of the application and entry shall be made in the Refund

register for receipt of refund applications.

8. In case of any deficiency of refund claim, a deficiency memo shall be issued by the

proper officer in FORM GST -03 to the claimant manually instead of common portal.

9. The proper officer shall grant provisional refund within 7 days of receipt of refund

application and an order shall be issued in FORM GST RFD-04 along with payment

advice to be issued in FORM GST RFD-05. The refund amount would be made directly

electronically into the claimant’s Bank account mentioned in the registration.

10. After the sanction of the provisional refund, final order in FORM GST RFD-06 is to be

issued within 60 days after due verification of the documentary evidences and receipt

of complete application form. Pre-audit of the manually processed refund applications

is not required to be carried out. The proper officer shall issue the refund order

manually. The details of the refund along with taxpayer bank account details shall be

manually submitted in PFMS system by the jurisdictional Division’s DDO and a signed

copy of the sanction order shall be sent to PAO office for release of payment and
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amount if any will be paid by an order with payment advice in FORM GST RFD-05.

11. The refund application for various taxes i.e. CT/ST/UT/IT/Cess can be filed with any

one of the tax authorities and shall be processed by the said authority, however the

payment of the sanctioned refund amount shall be made only by the respective tax

authority of the Centre or State Government and communicated to the concerned

counter-part tax authority within three days for the purpose of payment of the relevant

sanctioned refund amount of tax or cess, as the case may be.

As per sub-rule (4) of rule 89 of CGST Rules, 2017 in the case of zero-rated supply of goods

or services or both without payment of tax under bond or letter of undertaking in accordance

with the provisions of sub-section (3) of section 16 of the IGST Act, 2017, refund of input tax

credit shall be granted as per the following formula:-

Refund Amount = (Turnover of zero-rated supply of goods + Turnover of zero-rated

supply of services) x Net ITC / Adjusted Total Turnover.

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And as per sub-rule (5) in the case of refund on account of inverted duty structure , refund of

input tax credit shall be granted as per the following formula:-

Maximum Refund Amount = {(Turnover of inverted rated supply of goods x Net ITC /

Adjusted Total Turnover) – tax payable on such inverted rated supply of goods

Time Bound Refund

As per Sec 54(6) of CGST Act, Ninety per cent of the Total Amount so claimed shall be

refunded on a Provisional basis.

Sec 54(7) of CGST Act : The proper officer shall issue the order under sub-section (5)

within sixty days from the date of receipt of application complete in all respects.
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Note : In case of refund not granted within 60 days from the date of making application

& received acknowledgement for refund, interest is payable at the rate of

6% (Section 56 of CGST Act) – Notification No. 13/2017, 28th June, 2017

Please note that making of Refund Application is possible only after filling of Monthly

Return GST – 3 or GST – 3B. Means until that time plus additional seven days the

exporter should wait, and shouls carried with wrong notion of seven days from the

exports.

No Refund of Un-utilised Input Tax Credit in Certain Cases:

Sec 54(3) of CGST Act : Subject to the provisions of sub-section (10), a registered person may

claim refund of any un-utilised input tax credit at the end of any tax period:

Provided that no refund of un-utilised input tax credit shall be allowed in cases other than––

zero rated supplies made without payment of tax;

Provided further that no refund of unutilised input tax credit shall be allowed in cases where

the goods exported out of India are subjected to export duty:

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Provided also that no refund of input tax credit shall be allowed, if the supplier of goods or

services or both avails of drawback in respect of central tax or claims refund of the integrated tax
paid on such supplies.

Means Refund of Un-utilized Credit is not allowed in the following cases:

1. When Export Supplies are subjected to export duty:

2. When Drawback is availed

3. When claims refund of the integrated tax paid on such supplies

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Export Procedure on Payment of IGST & Refund of IGST Paid

• In case of goods exported on payment of IGST, refund of IGST can be claimed after

the goods have been exported –Rule 96 of CGST Rules : Refund of integrated tax paid

on goods exported

• For Export of goods the shipping bill is the only document required to be filed with the

Customs for making exports. Requirement of filing the ARE 1/ARE 2 has been done

away with.

• The shipping bill filed by an exporter shall be deemed to be an application for refund

of integrated tax paid on the goods exported out of India and such application shall be

deemed to have been filed only after submission of export general manifest and

furnishing of a valid return in Form GSTR-3 by the applicant.

• The details of the relevant export invoices contained in FORM GSTR-1 shall be

transmitted electronically by the common portal to the system designated by the

Customs and the said system shall electronically transmit to the common portal, a

confirmation that the goods covered by the said invoices have been exported out

of India.

• Upon the receipt of the information regarding the furnishing of a valid return in

FORM GSTR-3 from the common portal, the system designated by the Customs shall

process the claim for refund and an amount equal to the integrated tax paid in respect
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of each shipping bill or bill of export shall be electronically credited to the bank

account of the applicant mentioned in his registration particulars and as intimated to

the Customs

• Refund procedure shall as a consequence come into operation only when the

registrants file the above mentioned returns.

Sealing of Export Containers:

• Circular No. 26/2017-Customs; Dt : 1st July, 2017

• For the sake of uniformity and ease of doing business, Board has decided to simplify

the procedure relating to factory stuffing hitherto carried out under the supervision of

the Central Excise officers. It is the endeavor of the Board to create a trust based

environment where compliance in accordance with the extant laws is ensured by

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strengthening Risk Management System and Intelligence setup of the department.

Accordingly, Board has decided to lay down a simplified procedure for stuffing and

sealing of export goods in containers.

• It has been decided to do away with the sealing of containers with export goods by

CBEC officials. Self-sealing procedure shall be followed The concept of merchant or

manufacturer exporter would become irrelevant under the GST regime. The procedure

in respect of the supplies made for export is same for both merchant exporter

and a manufacturer exporter.

• Any exporter desirous of availing self-sealing procedure shall inform the jurisdictional

Custom Officer of the rank of Superintendent or Appraiser of Customs, at least 15 days before the
first planned movement of a consignment. This is a onetime

exercise.

• Self-Sealing permission once given by a Principal Commissioner/Commissioner of

• Customs shall be valid for export at all the customs stations.

• The exporter shall seal the container with the tamper proof electronic-seal of standard

specification. The electronic seal should have a unique number which should be

declared in the Shipping Bill. Before sealing the container, the exporter shall feed the

data such as name of the exporter, IEC code, GSTIN number, description of the goods,

tax invoice number, name of the authorized signatory (for affixing the e-seal) and

Shipping Bill number in the electronic seal.

• Thereafter, container shall be sealed with the same electronic seal before leaving the premises.
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Filling of Shipping Bill :

• Quoting GSTIN in Shipping bill is mandatory if the export product attracts GST for

domestic clearance.

• Quoting PAN (Permanent Account Number), which is authorized as Import Export code

by DGFT, would suffice if the exporter exclusively deals with products which are either

wholly exempt from GST or out of GST regime.

• In case of exports by specialized agencies such as United Nations Organization or

notified Multilateral Financial Institutions, Embassies and Consulates, the exporter can

quote Unique Identity Number, instead of GSTIN, in the Shipping bill.

• Without GSTIN or PAN or UIN, the Shipping bill cannot be filed.

• The claim for refund of IGST paid or Input Tax Credit on inputs consumed in goods

exported cannot be processed without GSTIN and GST Invoice details in Shipping Bill.

• Commercial Invoice information should be provided in the Shipping Bill. Wherever

Commercial Invoice is different from Tax Invoice, details of both have to be provided in

the Shipping Bill.

• Taxable value and Tax amount should be mentioned against each item in the Shipping

bill for processing the refund amount. Multiple tax invoices issued by same GSTIN

holder are allowed in one Shipping bill for the same consignee.
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• State code is part of GSTIN numbering scheme. However, in the Shipping Bill for the

Field

• “State of origin” declare the State code from where export goods originated as it was

being done before.

Export of Goods to Nepal and Bhutan Treated as Zero Rated and Qualify for all the
Export

Benefits

Export of goods to Nepal or Bhutan fulfills the condition of GST Law regarding taking

goods out of India. Hence, export of goods to Nepal and Bhutan will be treated as zero

orated and consequently will also qualify for all the benefits available to zero rated

supplies under the GST regime irrespective of the fact that export realization is received in

Indian Currency. However, the definition of ‘export of services’ in the GST Law requires

that the payment for such services should have been received by the supplier of services

in convertible foreign exchange.