Exporting goods and services is an integral part of any country’s economy. With the introduction of the Goods and Services Tax (GST), the process of exporting has undergone significant changes. GST has replaced indirect taxes like Excise Duty, Service Tax, VAT, etc. The introduction of GST has made exporting goods and services more accessible and streamlined. In this article, we will discuss the complete guide for exports of goods and services under GST, including fees for import-export licenses, import-export registration, and import-export license fees.
GST on Exports: GST applies to the supply of goods and services within India. However, exports of goods and services are considered zero-rated supplies. This means that no GST is levied on exports of goods and services. Zero-rated supplies mean the output is taxed at zero per cent,. Exporters can claim a refund of the input tax credit (ITC) that they have paid on inputs and input services used in manufacturing exported goods and services. However, exporters must follow specific procedures to claim refunds.
Export of Goods
The following are the steps involved in the export of goods under GST:
Getting the Goods Ready for Export: Once the exporter obtains an IEC, they must prepare the goods for export. This involves packing the goods, labelling them, and completing any necessary documentation.
Filing Shipping Bills: The exporter must file a shipping bill with the customs department. A shipping bill is a document that contains details of the goods being exported, the value of the goods, the destination country, and other relevant information.
Claiming Refunds: After the goods have been exported, the exporter can claim a refund of the ITC that they have paid on inputs and input services used to manufacture exported goods.
Export of Services
The export of services refers to providing services from India to a place outside India. Exporting services involves obtaining an IEC, providing services to the foreign recipient, and filing the necessary documentation.
The following are the steps involved in the export of services under GST:
Obtaining an IEC: As with the export of goods, the exporter must obtain an IEC from the DGFT before exporting services.
Providing Services to the Foreign Recipient: Once the exporter has obtained an IEC, they can provide services to the foreign recipient. The exporter must ensure that the services offered to comply with the relevant regulations.
Claiming Refunds: After the services have been exported, the exporter can claim a refund of the ITC that they have paid on inputs and input services used to provide exported services.
Before commencing any import or export activity, obtaining the necessary import or export registration is essential. This ensures you are legally authorised to import or export goods and services. The registration process differs based on the type of activity and the country of origin or destination. It is recommended to seek the help of a professional consultancy firm specialising in import and export registration.
Exporting goods and services involves various procedures and documentation that exporters need to be familiar with. This section of the guide will provide a detailed overview of the export procedures and the documentation required for exporting under GST. It will cover topics such as obtaining an Exporter Code, filing export declarations, preparing commercial invoices, packing lists, and other necessary documents. Understanding and following the correct export procedures and documentation is essential to ensure smooth and compliant exports under GST.
As mentioned earlier, IGST is levied on the export of goods, but it is later refunded to the exporter. The refund process is initiated when the exporter files their GST returns and submits the necessary documents. The refund is processed within a specified time limit, and the amount is credited to the exporter’s bank account. However, there have been instances where businesses have faced delays in receiving their refunds due to issues with documentation or technical glitches. To avoid such delays, it’s important to ensure that the necessary documents are submitted on time and in the correct format.
Another point to note is that the refund process can be complex, especially for businesses that export goods to multiple countries. Each country has its own set of rules and regulations, and the exporter needs to comply with these requirements to claim their refund. Additionally, there are certain categories of goods that are not eligible for a refund, such as goods that are exempt from GST or those that are consumed within India.
Import and Export License Fees
To obtain an import or export license, you must pay a fee to the respective regulatory authority. The price varies based on the license type and the country of origin or destination. Investigating these fees while planning your import or export activities is essential. Failure to pay the necessary fees can result in delays or even license cancellation.
Additionally, it is essential to note that certain goods and services may be exempted from GST on exports under specific schemes. These schemes include the Export Oriented Unit (EOU), Special Economic Zone (SEZ), and Deemed Export schemes. Under these schemes, certain goods and services may be exempted from GST or be subject to a reduced rate of GST.
Obtaining an Import Export Code (IEC) to export goods and services from India is also crucial. The IEC is a 10-digit code issued by the Director General of Foreign Trade (DGFT) and is required for all import and export activities. The application for an IEC can be made online through the DGFT website.
Regarding import and export registration, it is essential to note that registration requirements may vary depending on the type of business and the goods and services being traded. In general, companies must obtain a Registration Certificate (RC) from the Director General of Foreign Trade (DGFT) to carry out import and export activities. Additionally, certain goods may require specific licenses or permits from various government authorities before being exported from India.
As for the fees for import export license registration, the exact costs will depend on the type of license or registration being obtained. For example, the fee for getting an IEC is currently INR 1999, while the fee for getting an RC is INR 1,000. However, specific licenses and registrations may be subject to additional fees, such as the fee for obtaining a license to export certain restricted goods.
The GST on exports has had a significant impact on the Indian economy. It has simplified the tax structure, reduced the burden on exporters, and increased the competitiveness of Indian goods and services in the global market. However, it is essential to understand the various rules and regulations regarding exports under GST to avoid any compliance issues. Additionally, obtaining the necessary import or export registration and licenses is crucial for legal import and export activities. With the proper guidance and support, businesses can take advantage of the opportunities presented by the GST regime and boost their export potential.