DEEMED EXPORTS IN GST

Deemed Exports in GST

Definition:

“deemed exports” means such supplies of goods as may be notified under section 147 of the CGST/SGST Act, 2017.

Section 147: The Government may, on the recommendations of the Council, notify certain supplies of goods as deemed exports, where goods supplied do not leave India, and payment for such supplies is received either in Indian rupees or in convertible foreign exchange, if such goods are manufactured in India.

“Deemed Exports” refers to supplies of goods manufactured in India (and not services). Deemed exports are not zero rated supplies by default, unlike the regular exports. Hence all supplies notified as supply for deemed export will be subject to levy of taxes i.e. such supplies can be made on payment of tax and cannot be supplied under a Bond/LUT. However, the refund of tax paid on the supply regarded as Deemed export is admissible to either the supplier or the recipient. The application for refund has to be filed by the supplier or recipient (subject to certain conditions) of deemed export supplies, as the case may be.

Notification No. 48/2017 Central Tax -Deemed Exports:

In exercise of powers conferred under Section 147 of the CGST Act, the Central Government has issued Notification no. 48/2017-Central Tax dated 18.10.2017 wherein the following categories of supply of goods has been declared as Deemed Exports:

Sl No Description of Supply
1 Supply of goods by a registered person against Advance Authorisation issued by the Director General of Foreign Trade for import or domestic procurement of inputs on pre-import basis for physical exports.
2 Supply of capital goods by a registered person against Export Promotion Capital Goods Authorisation issued by the Director General of Foreign Trade for for import of capital goods for physical exports.
3 Supply of goods by a registered person to Export Oriented Unit (EOU) or Electronic Harware Technology Unit (EHTPU) or Software Technology Park Unit (STPI) or Biotechnology Park Unit (BTP).
4 Supply of gold by a bank or Public Sector Undertaking specified in the notification No. 50/2017-Customs, dated the 30th June, 2017 (as amended) against Advance Authorisation.

Refund on Deemed Exports:

The application for refund in case of deemed exports can either be filed by the recipient of deemed export supplies. Alternatively, the supplier of such deemed exports supplies can also file the refund application, in cases where the recipient does not avail of input tax credit on such supplies and furnishes an undertaking to the effect that the supplier may claim the refund.

The recipient of deemed export supplies can claim refund of input tax credit availed in respect of other inputs or input services used in making zero-rated supply of goods or services or both, in case of deemed export supplies on which the supplier has availed the benefit of notification No. 48/2017-Central Tax dated 18.10.2017.

The recipient of deemed export supplies on which the supplier has availed the benefit of notification No. 48/2017-Central Tax dated 18.10.2017 cannot export on payment of integrated tax.

For obtaining refund the recipient or supplier of deemed export supplies has to file an application in FORM GST RFD-01 through the Common Portal, either directly or through a Facilitation Centre notified by the Commissioner before the expiry of two years from, the date on which the return relating to such deemed export supplies is to be furnished electronically.

Deemed Exports Procedure:

The following procedure to be following for the notified deemed export supplies to EOU/EHTP/STP/BTP units:

  • The recipient EOU / EHTP / STP / BTP unit shall give prior intimation in Form-A to the registered supplier, the jurisdictional GST officer in charge of such registered supplier and its jurisdictional GST officer.

  • The registered supplier thereafter will supply goods under tax invoice to the recipient EOU / EHTP / STP / BTP unit.

  • On receipt of such supplies, the EOU / EHTP / STP / BTP unit shall endorse the tax invoice and send a copy of the endorsed tax invoice to to the registered supplier, the jurisdictional GST officer in charge of such registered supplier and its jurisdictional GST officer.

The endorsed tax invoice will be considered as proof of deemed export supplies by the registered person to EOU / EHTP / STP / BTP unit.

The receipent of EOU / EHTP / STP / BTP unit shall maintain records of such deemed exports in digital form, based on the data elements contained in Form-B.

Form A:

The following is the Form A format, in which the recipient EOU / EHTP / STP / BTP unit shall give prior intimation to the registered supplier, the jurisdictional GST officer in charge of such registered supplier and its jurisdictional GST officer.

Form B:

The following is the Form B format. The EOU / EHTP / STP / BTP shall provide the digital copy of Form-B to the Jurisdictional GST Officer on monthly basis (ie. by 10th of next month for the previous month details) in a CD or Pen Drive etc.

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