Understanding the process of claiming GST refunds on exports is crucial for every export-import business.
Exports fall under ‘Zero-rated supplies’ in GST, enabling exporters to seek refunds for paid taxes, including IGST and any applicable cess. The GST portal simplifies the refund process for exporters dealing with large transaction volumes, making it more efficient and user-friendly.
In this blog, we will take you through all about gst refund for export, how to claim gst refund on exports, and more…
Definition of Export Under GST Act?
Under the IGST Act, an export refers to the movement of goods or services from India to a place outside India, excluding supplies to special economic zones or goods meant for international exhibitions. These transactions qualify as zero-rated supplies (GST rate is 0%). Taxable persons who engage in exporting goods and services are eligible to seek refunds for the GST they have paid.
What is GST Refund on Export?
When goods are exported, they are generally relieved of domestic taxes. The Goods and Services Tax (GST) is no exception. Exporters are entitled to claim a refund of the GST paid on inputs used in the production of goods for export.
How to Claim Refund of GST on Export?
First come first. Let’s talk about the components of GST. There are 3 components of GST – Central GST, State GST and Integrated GST.
For inter-state supplies, imports, and exports, IGST is applicable in India. However, the exporter has the option to claim IGST refund on export. This can be done in one of the two ways
1. Exporting without Paying IGST:
- Exporters can claim a refund on unutilized input credit without paying IGST upfront.
- No separate application is needed; the Shipping Bill itself serves as an application.
- The exporter needs to file GSTR-1, GSTR-3B, and submit the export general manifest.
- The filing of the shipping bill, indicating goods exported outside India, serves as a deemed application.
- The refund for duty paid is typically quick and is granted within about two weeks.
2. Exporting by Paying IGST:
- If an exporter pays IGST for exporting goods/services, they can claim a refund for the tax paid.
- For refund claims without prior IGST payment and input credit, a separate online application (Form RFD-01A) is necessary.
- Supporting documents should accompany a hard copy of the application submitted manually to GST officials.
- The refund is processed based on the verification of the submitted documents.
Application Process of IGST Refund on Exports for Goods and Services
- Exporters must apply for refunds via the common GST portal or a designated facilitation center by the GST Commissioner.
- Once applied, refunds should be disbursed within 60 days from receiving a complete refund application.
- If the refund isn’t processed within this timeframe, the applicant is entitled to receive 6% interest on the delayed amount.
Documents Required for Refund of IGST Paid on Exports
When exporting goods and aiming to claim a GST refund, you’ll need the following documents:
Essential Documents for GST Return on Goods Export:
- Invoice: Detailed invoices for the goods being exported, specifying the quantity, value, and particulars of the goods.
- Shipping Bill: This document is filed with the customs department, containing details about the exported goods. It’s a crucial document for claiming a GST refund on export.
Additional Documents Depending on the Circumstances:
For Exporting without Paying IGST:
- Export General Manifest: Details of the goods being exported, often submitted with the shipping bill.
- Filed GST Returns (GSTR-1 and GSTR-3B): These returns showcase the export details and are essential for claiming refunds without paying IGST upfront.
For Exporting by Paying IGST:
- Form RFD-01A: A separate online application form required for claiming refunds when IGST was paid during the export.
- Supporting Documents: Any additional paperwork or evidence necessary for the specific refund claim.
Application Process Overview:
The documentation may vary based on whether IGST was paid at the time of exporting or not.
For goods exported without upfront IGST payment, the shipping bill and filed GST returns are essential.
For exporters who paid IGST, additional documentation such as Form RFD-01A and supporting evidence might be necessary for the refund application.
Essential Documents for GST Refund on Services Export:
- Invoice for Services: Similar to goods, invoices detailing the services provided need to be maintained.
- Statement of Exports: A comprehensive statement or record detailing the exported services, specifying the nature, value, and recipient of the services.
- Bank Realization Certificate (BRC): This document validates the receipt of payment for the exported services in foreign currency.
- Form RFD-01A or Application for Refund: Particularly if the exporter paid IGST or seeks a refund without utilizing input credit.
- Supporting Documents: Any additional paperwork substantiating the exported services, which might include contracts, agreements, or certificates as required by authorities.
Key Points for Services Export refund:
In addition to invoices, maintaining a detailed record of the exported services is crucial.
The Bank Realization Certificate serves as evidence of receiving payment in foreign currency.
Similar to goods, if IGST was paid or if a refund is sought without utilizing input credit, the specific application form (Form RFD-01A) might be necessary.
Conclusion
While the GST refund process presents challenges, including potential documentation errors, verification delays, and technical glitches, proactive measures can be taken to mitigate these issues. This not only facilitates a seamless process in obtaining IGST refunds on exports but also contributes to the overall efficiency and competitiveness of businesses in the global market.
Frequently Asked Questions about GST Refund on Exports
1. What is the timeline for processing a GST refund on exports?
The timeline for processing export GST refund varies but typically takes around 15 days to one month after the application is filed.
2. Are there any specific conditions for claiming a refund of IGST paid on export of goods?
Yes, exporters must ensure compliance with conditions specified under GST laws, including timely filing of requisite documents.
3. Can an exporter claim a GST refund for export without IGST payment?
Exporters can either export under LUT/Bond or pay IGST and claim a refund subsequently.
