All about Exports under GST

Under GST, Exports of Goods and Services is termed as Zero-rated Supply. 

There is a difference between exempt supply and zero-rated supply. Zero-rated supply means that the full value chain is zero taxed i.e. there is no tax to be paid on output supply and also the input GST paid on purchases etc. is also liable to be refunded. 

Whereas in the case of exempt supply, the outward supply is exempt but the inward supply is liable to GST and no input credit is available for the same. 

In the case of export, the exporter has the option of either paying IGST at the time of export and claim a refund of net IGST paid or can export under bond/LUT without making any payment of IGST and claim the ITC on inputs paid. 

Now we shall discuss what types of Exports are there. 

EXPORT OF GOODS : 

There are three types of Exports of Goods :

1. Physical Exports : 

Physical exports mean taking goods from India to a place outside India. The place outside India should be more than 200 nautical miles from the coastal baseline. 

In the case of physical export, the exporter can either pay IGST at the time of export and claim refund of net IGST or can export the bond/LUT without making any payment of IGST and claim the ITC on inputs paid. 

2. Deemed Exports : 

The Govt. has notified certain categories of supply to be deemed exports under section 147 of the CGST Act. These are treated as deemed exports because the goods do not leave India. 

The notified deemed exports are as under : 

(a) Supply of Goods by a registered person under Advance Authorisation Scheme

(b) Supply of Capital goods by a registered person under EPCG (Export promotion capital goods authorization)

(c) Supply of goods by the Registered person to EOU (Export oriented unit)

One important thing to note is that the deemed exports are not zero-rated perse i.e. payment of tax has to be made on supply of these goods and they can not be supplied under LUT/Bond. However, later the refund of tax can be taken either by supplier or receiver. 

3. Merchant Exporter :

Merchant exporter basically means exporting the goods through a third party involved which is known as merchant exporter. Ther is a tax of 0.1% on the supply of goods through merchant exporters. (i.e. 0.1% IGST or 0.05% CGST and 0.05% SGST) 

The merchant exporter will be eligible to take credit of 0.1% of tax paid to the supplier. However, he shall export the goods on bond/LUT only and can not export the same on the basis of payment of tax. 

Also, the supplier who pays 0.1% tax will be allowed to take a refund of GST paid on inputs.