FAQ on Import, Export & Refund Under GST

How to manage export under GST?

Export of goods from India attracts  NIL rate of GST.

If GST is paid at any point of time against exports from India can be either refunded or can be exported under bond without paying GST.

If IGST is involved on any exports from India, the Export Invoice has to be reflected an endorsement as 'Supply meant for Export on Payment of IGST' or 'Supply meant for Export under bond without payment of IGST'.

Any movement of goods for export where IGST is leviable can be effected in two methods. Either the exporter from India can pay IGST in advance and gets refund later after exports by submitting required documentary proof for exports or the exporter can execute a bond against IGST leviable against such goods. If a bond is executed by an exporter against IGST payable against such export goods, the exporter can cancel such bond by producing required proof of documents of exports.

The contents in export Invoice remains same except inclusion of following information:

1. An endorsement in Export Invoice as 'SUPPLY MEANT FOR EXPORT ON PAYMENT OF IGST' or 'SUPPLY MEANT FOR EXPORT UNDER BOND WITHOUT PAYMENT OF IGST', as the case may be.
2. Name and address of the recipient
3. Address of Delivery
4. Name of the country of Destination
5. Number and date of application of removal of goods for Export (ARE-1)

Now a  days in international trade, instead of Export Invoice and Export packing list, a single document called 'Export invoice cum Packing list' is accepted in customs and other authorities worldwide.

Is CGST and SGST charged on import of goods and services in India?

As per GST Act, both SGST and CGST is not charged on imports in India.

How is IGST rate on imports treated?

Import of goods to India is treated as interstate supply, hence treated as IGST. So IGST is levied on import of goods to India.

What are the import duties replaced with GST?

After introduction of GST, CVD and SAD are replaced with Integrated Goods and Service Tax, IGST.

What are the main two components in determining import duty in India after implementation of GST?

IGST and Basic Customs Duty are the main two components in determining the total import duty payable to customs at the time of Import of Goods to India after introduction GST.

How is IGST calculated under Imports in India?

In imports, IGST is computed on transaction value of imported goods plus duties and taxes etc. charged under any statute other than the GST Law.

What is the difference between IGST on Imports and IGST on domestic goods?

Integrated Goods and Service Tax IGST is payable for each and every import transaction before taking delivery of imported goods. Whereas IGST is paid monthly along with returns of IGST against domestic movement of goods and services.

Can IGST, CGST or SGST paid against imports be refunded on eligibility?

Yes, CGST, IGST and SGST paid on imports can be claimed back if eligible.

Is BCD is added on the transaction value of the imported goods?

Yes,  BCD should be added to the transaction value of the imported goods.

Are antidumping duty and safeguard duty are continued after implementation of GST?

Yes, antidumping duties and safeguard duties are continued to be incorporated in total import duty payable also.

How does related party valuation under GST regime work?

There could be a mechanism like SVB (Special Valuation Branch as in Customs Law) in imports to monitor relative party valuation on goods and service tax under GST mechanism.

Does GST regime effect government export promotion schemes and incentives in India?

Yes, implementation of GST may affect present various export promotion schemes, incentives and exemptions in India.

How is CGST and SGST accounted under Import of Goods and Services.

The fundamental concept of GST is collection of tax at destination. Here in imports also CGST and SGST collected also is distributed centre and state respectively.

Who is eligible for SGST levied on imports - State or Central?

Since SGST meant for the destination state where goods are consumed, SGST collected under imports also is meant for state government where the imported goods or services are finally consumed.

How will Exports be treated under GST?

Exports will be treated as zero rated supplies.  No tax will be payable on exports of goods or services, however credit of input tax credit will be available and same will be available as refund to the exporters. 

What are the situations for Refund under GST?

1. Excess payment of tax due to mistake or inadvertence.
2. Export (including deemed export) of goods / services under claim of rebate or Refund of accumulated input credit of duty / tax when goods / services are exported.
3. Finalization of provisional assessment.
4. Refund of Pre - deposit for filing appeal including refund arising in pursuance of an appellate authority's order (when the appeal is decided in favour of the appellant).
5. Payment of duty / tax during investigation but no/ less liability arises at the time of finalization of investigation / adjudication.
6. Refund of tax payment on purchases made by Embassies or UN bodies.
7. Credit accumulation due to output being tax exempt or nil-rated.
8. Credit accumulation due to inverted duty structure i.e. due to tax rate differential between output and inputs.
9. Year-end or volume based incentives provided by the supplier through credit notes.
10. Tax Refund for International Tourists.

What is the refund Process under GST

The procedures for claiming the refund is as below:

1. Application form for claiming refund can be filed through the GSTN portal.
2. An acknowledgement number would be shared with applicant via sms or email, once the application is filed electronically.
3. Adjustment would be made to return and cash ledger and increase the amount of  'carry-forward input tax credit' automatically.
4. Refund application and documents submitted shall be scrutinized within a period of 30 days of filing the refund application.
5. Concept of 'unjust enrichment' would be examined for reach refund application. If it does not qualify, then the refund would be transferred to CWF(consumer welfare fund).
6. If refund claimed exceeds the predetermined amount of refund then it will go through pre-audit process for sanctioning the refund.
7. Refund will be credited electronically to the account of applicant via ECS, RTGS or NEFT.  
8. Application for refund can be made at end of each quarter.
9. No refund shall be provided for an amount of less than Rs 1000.

What if there is delay in refund process?

A refund application is to be processed within a period of 90 days.

If the refund application is not processed within said period then a interest  at the rate of 6% is recommended.

However, as per Ms. Nirmala Sitharaman (Commerce and industry minister) who spoke for the concern of exporters on delay in refund, that the refunds under GST shall be processed within a period of 7 days. If same is delayed more than 2 weeks, then refund will be provided with interest.

The author is a practicing CA and is registered Insolvency Professional. He can also be reached at cavinodchaurasia@gmail.com