Exports procedures and rules under GST https://www.caclubindia.com/articles/exports-procedures-and-rules-un...

Home / Articles / GST

What do you want to learn today?

All Subjects All Faculty Demo Videos

Exports procedures and rules under GST

Definition of Exports:

Exports may be either Goods or Service or both

and are defined as follows in the IGST Act.

Exports of goods: Section 2(5) of IGST Act,

2017 provides that 'export of goods' means
taking goods out of India to a place outside India.

Exports of services: Section 2(6) of IGST Act, 2017 provides that 'export of services' means
the supply of any service when:

i. supplier of service is located in India;

ii. recipient of service is located outside India;
iii. place of supply of service is outside India;
iv. payment for such service has been received by the supplier of service in convertible
foreign exchange; and
v. supplier of service and the recipient of service are not merely establishments of a distinct
persons

Details:

Under section 7(5) of IGST Act, supply will be treated, as inter-state supply when the supplier
is located in India and the place of supply is outside India or place of supply is SEZ unit.

1 of 16 23/08/2018, 11:14 AM
Exports procedures and rules under GST https://www.caclubindia.com/articles/exports-procedures-and-rules-un...

Further, Exports & Supplies to SEZ Developer/Unit would be considered as 'Zero rated
supply' under section 16 of IGST Act.

Any person making zero rated supply (i.e. any exporter) shall be eligible to claim refund under
either of the following options, namely:-

a. Supply goods or services or both under bond or Letter of Undertaking (LUT), subject to
such conditions, safeguards and procedure as may be prescribed, without payment of
integrated tax and claim refund of unutilized input tax credit; or

b. 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 (Refunds) of the
Central Goods and Services Tax Act or the rules made there under.

For the option (a) and (b), procedure to file refund has been outlined in the Refund Rules
under GST. For both option (a) and (b) exporters have to provide details of GST invoice in the
Shipping bill.

In order to ensure smooth transition from the earlier export procedure to the procedure being
laid down for export of goods under the GST regime, the existing Shipping Bill formats (both
manual/ electronic) have been modified to make them compliant with the IGST law. New
formats of the Shipping Bill have been made applicable already.

ARE-1 procedure which was being followed is dispensed with except in respect of
commodities to which provisions of Central Excise Act would continue to be
applicable.

Furnishing of LUT and its Validity:

1. Exporters who are eligible to export under LUT has been specified along with the conditions
and safeguards in the Notification No. 16/2017-Central Tax dated 01-07-2017.

2. The following registered person shall be eligible for submission of Letter of Undertaking in

2 of 16 23/08/2018, 11:14 AM
Exports procedures and rules under GST https://www.caclubindia.com/articles/exports-procedures-and-rules-un...

place of a bond:-

a. who has received the due foreign inward remittances amounting to a minimum of 10% of
the export turnover, which should not be less than one crore rupees, in the preceding
financial year,
b. a status holder as specified in paragraphs 3.20 and 3.21 of the Foreign Trade Policy
2015-2020; or
c. and he has not been prosecuted for any offence under the Central Goods and Services
Tax Act, 2017 (12 of 2017) or under any of the existing laws in case where the amount
of tax evaded exceeds two hundred and fifty lakh rupees.

3. It is clarified that LUT shall be valid for twelve months.

4. LUTs are generally submitted on the letterhead containing signature and seal of the person
or the person authorized in this behalf.

Furnishing of Bond:

All exporters, not covered above under LUT would submit bond. The procedures for
submission and acceptance of bond has been prescribed vide circular No. 2/2/2017-
GSTdated 4th July, 2017 & Circular No. 4/4/2017-GST, 7th July, 2017.
FORM RFD -11 under rule 96A of the CGST Rules requires furnishing a bank guarantee
with bond. Field formations have requested for clarity on the amount of bank guarantee
as a security for the bond.
Running bond (separate bond for each consignment / export not required) will be
required to cover amount of tax involved in export based on estimated tax liability as
assessed by exporter.
The bond shall be furnished on non-judicial stamp paper of the value as applicable in
the State in which bond is being furnished.
The jurisdictional Commissioner may decide about the amount of bank guarantee
depending upon the track record of the exporter
No bank guarantee required if Commissioner is satisfied
In any case the bank guarantee should normally not exceed 15% of the bond amount
Bond / LUT to be submitted manually to jurisdictional Deputy/Assistant Commissioner,

3 of 16 23/08/2018, 11:14 AM
Exports procedures and rules under GST https://www.caclubindia.com/articles/exports-procedures-and-rules-un...

till module is available on portal

Instances where furnishing of bond is not required:

i. An exporter registered with recognized Export Promotion Council, on submission of a

self-attested copy of the proof of registration with a recognized Export Promotion Council
need not submit bond.
ii. If a person having one PAN is registered in more than one State, because of splitting and
accountal of receipts and turnover across different registered person with the same PAN
the total amount of inward foreign remittances received by all the registered persons,
having one Permanent Account Number, may be Rs. 1 crore or more and it also may be
10% or more of total export turnover. In such cases, the registered person can be
allowed to submit bond without bank guarantee.

Exporter may furnish bond/LUT before Central Tax Authority or State Tax Authority till the
administrative mechanism for assigning of tax payers to respective authority implemented

Exports may be allowed under existing LUTs/Bonds till 31st July 2017. Exporters shall
submit the LUTs/bond in the revised format latest by 31st July, 2017.

Procedure for Refund Claim of Accumulated ITC:

1. The registered person availing the option to supply goods or services for export without
payment of IGST shall furnish, a bond or a Letter of Undertaking in FORM GST RFD-11, prior
to export to the jurisdictional Commissioner, binding himself to pay the tax due along with the
specified interest within a period of:

4 of 16 23/08/2018, 11:14 AM
Exports procedures and rules under GST https://www.caclubindia.com/articles/exports-procedures-and-rules-un...

a. 15 days after the expiry of three months from the date of issue of the invoice for export, if
the goods are not exported out of India; or
b. 15 days after the expiry of one year, or such further period as may be allowed by the
Commissioner, from the date of issue of the invoice for export, if the payment of such
services is not received by the exporter in convertible foreign exchange.

2. 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 such invoices have been exported out of India shall be
electronically transmitted to the common portal from the system.

3. Where the goods are not exported within the time limit and the registered person fails to
pay the amount, the export as allowed under bond or Letter of Undertaking shall be withdrawn
forthwith and the said amount shall be recovered from the registered person in accordance
with the provisions of section 79.

4. The export as allowed under bond or Letter of Undertaking withdrawn in terms of sub-rule
(3) shall be restored immediately when the registered person pays the amount due.

5. The Board, by way of notification, may specify the conditions and safeguards under which a
Letter of Undertaking may be furnished in place of a bond.

Procedure on Payment of IGST & Refund of IGST Paid:

The shipping bill filed by an exporter shall be deemed to be an application for refund of IGST
paid on the export of goods and such application shall be deemed to have been filed only
when:-

a. the person in charge of the conveyance carrying the export goods duly files an export
manifest or an export report covering the number and the date of shipping bills or bills of
export; and

b. the applicant has furnished a valid return in FORM GSTR-3 or FORM GSTR- 3B, as the
case may be;

5 of 16 23/08/2018, 11:14 AM
Exports procedures and rules under GST https://www.caclubindia.com/articles/exports-procedures-and-rules-un...

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 system shall electronically transmit to the common portal, a
confirmation that the goods covered by the invoices have been exported out of India.
Upon the receipt of the information regarding the furnishing of a valid return in FORM
GSTR-3 or FORM GSTR-3B, as the case may be from the common portal, the system
designated by the Customs shall process the claim for refund and an amount equal to
the IGST paid in respect 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 authorities.
The claim for refund shall be withheld where,

c. A request has been received from the jurisdictional Commissioner of central tax, State tax
or Union territory tax to withhold the payment of refund due to the person claiming refund in
accordance with the provisions of sub-section (10) or sub-section (11) of section 54; or

d. The proper officer of Customs determines that the goods were exported in violation of the
provisions of the Customs Act, 1962.

If the applicant becomes entitled to refund of the amount withheld due to above reasons, the
concerned jurisdictional officer of central tax, State tax or Union territory tax, as the case may
be, shall proceed to refund the amount after passing an order in FORM GST RFD-06.

The Central Government may pay refund of the integrated tax to the Government of Bhutan
on the exports to Bhutan for such class of goods as may be notified in this behalf and where
such refund is paid to the Government of Bhutan, the exporter shall not be paid any refund of
the integrated tax.

Sealing of Export Containers:

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

In the earlier regime, there were three categories of containers which arrive at the port/ICD:

a. Containers stuffed at factory premises or warehouse under self-sealing procedure.

6 of 16 23/08/2018, 11:14 AM
Exports procedures and rules under GST https://www.caclubindia.com/articles/exports-procedures-and-rules-un...

b. Containers stuffed / sealed at factory premises or warehouse under supervision of

central excise officer.
c. Containers stuffed and sealed at Container Freight Stations/ Inland Container Depot.

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. 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. Instead, self-sealing procedure shall be followed subject to the following:

i. The exporter shall inform the details of the premises whether a factory or warehouse or
any other place where container stuffing is to be carried out, to the jurisdictional customs
officer.
ii. The exporter should be registered under the GST and should be filing GSTR1 and
GSTR2. Where exporter is not a GST registrant, he shall bring the export goods to a
Container Freight Station/Inland Container Depot for stuffing and sealing of container.
However, in certain situations, an exporter may follow the self-sealing procedure even if
he is not required to be registered under GST Laws. Such an exception is available to
the Status Holders recognized by DGFT under a valid status holder certificate issued in
this regard.
iii. Exporter desirous of availing this 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 from factory or premises, Once the permission is
granted, the exporter shall furnish only intimation to the jurisdictional Superintendent or
Customs each time self-sealing is carried out at approved premises. The intimation shall
clearly mention the place and address of the approved premises, description of export
goods and whether or not any incentive is being claimed.
iv. Where the visit report of the Superintendent or an Appraiser or an Inspector of Customs
regarding viability of the stuffing at the factory/ premises is not favorable, the exporter
shall bring the goods to the Container Freight Station /Inland Container Depot/Port for
sealing purposes.
v. Self-Sealing permission once given by a Principal Commissioner/Commissioner of

7 of 16 23/08/2018, 11:14 AM
Exports procedures and rules under GST https://www.caclubindia.com/articles/exports-procedures-and-rules-un...

Customs shall be valid for export at all the customs stations. The customs formation
granting the self sealing permission shall circulate the permission along with GSTIN of
the exporter to all Custom Houses/Station concerned.
vi. Transport document for movement of self-sealed container by an exporter from factory or
warehouse shall be same as the transport document prescribed under the GST Laws. In
the case of an exporter who is not a GST registrant, way bill or transport challan or lorry
receipt shall be the transport document.
vii. 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.
viii. The exporter intending to clear export goods on self-clearance (without employing a
Customs Broker) shall file the Shipping Bill under digital signature.
ix. All consignments in self-sealed containers shall be subject to risk based criteria and
intelligence, if any, for examination / inspection at the port of export. At the port/ICD as
the case may be, the customs officer would verify the integrity of the electronic seals to
check for tampering if any enroute. The Risk Management System (RMS) is being
suitably revamped to improvise the interdiction/ examination norms. However, random or
intelligence based selection of such containers for examination/scanning would continue.

The above revised procedure regarding sealing of containers shall be effective from
01.09.2017. Therefore, as a measure of facilitation, the existing practice of sealing the
container with a bottle seal under Central Excise supervision or otherwise would continue. The
extant circulars shall stand modified on 01.09.2017 to the extent the earlier procedure is
contrary to the revised instructions given in this circular.

Filing 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

8 of 16 23/08/2018, 11:14 AM
Exports procedures and rules under GST https://www.caclubindia.com/articles/exports-procedures-and-rules-un...

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.
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:

i. It is clarified that acceptance of LUT instead of a bond for supplies of goods to Nepal or
Bhutan 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
applicable RBI guidelines.
ii. 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.

Invoicing in case of exports:

The contents in Export Invoice remain same except inclusion of following information:

An endorsement in Export Invoice as 'SUPPLY MEANT FOR EXPORT ON PAYMENT

9 of 16 23/08/2018, 11:14 AM
Exports procedures and rules under GST https://www.caclubindia.com/articles/exports-procedures-and-rules-un...

OF IGST' or 'SUPPLY MEANT FOR EXPORT UNDER BOND WITHOUT PAYMENT OF

IGST', as the case may be, and shall, in lieu of the details.
Name and address of the recipient
Address of Delivery
Name of the country of Destination
Number and date of application of removal of goods for Export (ARE-1)

The above procedures are same as central excise procedures for movement of goods for
export, previous to introduction of GST except slight changes in procedures.

Duty drawback under GST:

No amendments have been made to the drawback provisions (Section 74 or Section 75)
under Customs Act 1962 in the GST regime. Hence, the drawback scheme will continue in
terms of both Section 74 and section 75. Option of All Industry Rate (AIR) as well as Brand
Rate under Section 75 shall also continue.

Drawback under Section 74 will refund Customs duties as well as Integrated Tax and
Compensation Cess paid on imported goods which are re-exported.

In earlier law Duty Drawback Scheme under Section 75 neutralizes Customs duty, Central
excise duty and Service Tax chargeable on any imported materials or excisable materials
used or taxable services used as input services in the manufacture of export goods. Under
GST regime, Drawback under Section 75 shall be limited to Customs duties on imported
inputs and Central Excise duty on items specified in Fourth Schedule to Central Excise Act
1944 (specified petroleum products, tobacco etc.) used as inputs or fuel for captive power
generation.

A transition period of three months is also being provided from date of implementation of GST
i.e. 1.7.2017. During this period, existing duty drawback scheme under Section 75 shall
continue. For exports during this period, exporters can claim higher rate of duty drawback
(composite All Industry Rates (AIR)) subject to following conditions:

i. No input tax credit of CGST/IGST is claimed,

10 of 16 23/08/2018, 11:14 AM
Exports procedures and rules under GST https://www.caclubindia.com/articles/exports-procedures-and-rules-un...

ii. No refund of IGST paid on export goods is claimed and

iii. No CENVAT credit is carried forwarded.

A declaration from exporter and certificate from jurisdictional GST officer in this regard has
been prescribed in the notification related to AIRs. This will prevent double availment of
neutralization of input taxes. Similarly, the exporter can claim brand rate for Customs, Central
Excise duties and Service Tax during this period.

Exporters also have the option of claiming only the Customs portion of AIR and claim
refund/ITC under GST laws.

The certificates from jurisdictional GST officer as referred above may not be available during
initial days. As per Systems design, whenever higher rate (composite rate) of drawback is
claimed, the non-availment of credit certificate is a mandatory document and unless it is
recorded as available, shipping bill will not move to LEO stage.

Secondly, it could be possible that export goods may be manufactured by using both Central
Excise/Service Tax paid and CGST/IGST paid inputs and inputs services or only CGST/IGST
paid inputs and inputs services. In such situation, an exporter opting to claim composite rate
of duty drawback during transition period has to give specified declaration and produce
certificates as stated above so that he does not claim double benefit. Exporter will have to
reverse the ITC if any availed and also ensure that he does not claim refund of ITC/IGST.
Requisite certificate from GST officer shall also be required to this effect. As mentioned earlier,
exporters will also have option of claiming credit/refund of CGST/IGST and claim Customs
rate drawback.

Utilization of SEIS and MEIS Scrip's under GST:

The duty credit scrip's cannot be used for payment of IGST (Integrated Goods and
Services Tax) and GST compensation cess in imports, and CGST, SGST, IGST and GST
compensation cess for domestic procurement.
For items covered under the GST, scrip's can be used for payment of Basic Custom
Duty, Safeguard Duty, Transitional Product Specific Safeguard Duty, and Antidumping
Duty.

11 of 16 23/08/2018, 11:14 AM
Exports procedures and rules under GST https://www.caclubindia.com/articles/exports-procedures-and-rules-un...

For items not covered under the GST (specified in Fourth Schedule to Central Excise Act
1944 covering specified petroleum products, tobacco etc.), in addition to the Basic
Custom Duty, Safeguard Duty, Transitional Product Specific Safeguard Duty, and
Antidumping Duty, scrip's can also be used for payment of duties like central excise,
CVD/ SAD.

Note: The scrip's cannot be used for payment of any type of GST.

GST Certification Course

Beginners to Advance Level by Bimal Jain

Recommended Read
Eway Bill of GST : Complete Analysis
Comprehending applicability of GST on supplies from unregistered persons

More »

Shashindhar Reddy Anumandla

on 05 October 2017

10 FACEBOOK TWITTER LINKEDIN

SHARES

Published in GST Other Articles by - Shashindhar Reddy Anumandla

Views : 4645 Report Abuse

Total likes : 2 times

← Previous Next

12 of 16 23/08/2018, 11:14 AM
Exports procedures and rules under GST https://www.caclubindia.com/articles/exports-procedures-and-rules-un...

AARAM FOOTWEAR 10 months ago (26 October 2017 at 18:45

aarampufootwear@gmail.com
Reply

Your are not logged in . Please login to post comments.

Click here to Login / Register

Related Articles

Job work under GST - Demystified

Impact of GST over Contractors
20 Things you must know about E-Way Bills in GST law
Recent Controversy over date of filing of form GST TRAN-1
Section 17 of GST - Apportionment of credit and blocked credits
Effects of Demonetization and GST on Personal Income Tax Growth
Injustice to Home Buyers and Builders under GST regime
Sale of Capital Goods in GST Regime

More »

Other Latest Articles

Summary IND AS 115 Revenue from Contracts with Customers

All basic concepts of letter of credits to banks
Need for SEBI to protect Investors from Frauds and Scams
How technology is disrupting the Financial Services sector
Why CFO needs to have an Enterpreneurial Instinct
Mutual Fund Mondays: Basic Terminologies
The saga of Home Buyers under Insolvency and Bankruptcy Code
Obstacles in celebrating GST Rakshabandahan (Matching)
GST Implications on certain unique transactions
Advance Ruling under GST - Is it the cure for all?

More »

13 of 16 23/08/2018, 11:14 AM
Exports procedures and rules under GST https://www.caclubindia.com/articles/exports-procedures-and-rules-un...

Subscribe Articles Choose from below Online Classes

Enter your email address to subscribe
Articles on email.
GST Certification Course
Enter your email address Submit (Professional)

GST Certification Course

(Professional)

Advanced Auditing
(CA-Final)

Corporate and Allied Laws

(CA-Final)

AS and IND AS
(CA-Final)

Direct Tax Laws

(CA-Final)

View all Subjects

14 of 16 23/08/2018, 11:14 AM
Exports procedures and rules under GST https://www.caclubindia.com/articles/exports-procedures-and-rules-un...

Similar Forum Post

Business entity
about place of supply

CCI Articles works contact gst input

ITC Refund if No Services
You can also submit your article by sending to
article@caclubindia.com RCM on Advocate fee
VAT ACT
Submit article
e way bill by transporter

More »
Popular Picks
Key Features of New Monthly Returns under
Browse by Category
GST Income Tax GST Audit Students

Why GST E-book is better than a physical Accounts Custom VAT Career
book
Service Tax Corporate Law Info Technology
30 points of proposed New GST Returns ! Excise Shares & Stock Exams LAW
Gist of GST Notifications giving effect to Professional Resource Union Budget Others
recommendations of 28th GST Council

15 of 16 23/08/2018, 11:14 AM
Exports procedures and rules under GST https://www.caclubindia.com/articles/exports-procedures-and-rules-un...

meeting Taxpayers

Non Compliance & Cases where no E-Way

Bill Required

Comparative summary of key 21 GST

amendments as passed by Lok Sabha

Note on the Draft of Simplified GST Returns

approved by GST council

Important note for GST on Canteen Services

GST Charcha: Reduction in GST rates on

several goods - Anti-Profiteering alert!!

How GST Practitioner can perform activities

on behalf of Taxpayers

view more »

Search Articles

Our Network Sites

About Terms of Service

We are Hiring Disclaimer

Media Coverage Privacy Policy

Advertise Contact Us

Enter your email address Submit Query

© 2018 CAclubindia.com. Let us grow stronger by mutual exchange of knowledge.

16 of 16 23/08/2018, 11:14 AM