Impact of GST on Export of Goods and Services

Impact of GST on Export of Goods and Services

Impact of GST on Export of Goods and Services

Implementing GST in India is a major reform bringing some radical changes to both Indian business strategy and International Trade (import & export) of goods. Import and export of goods is vital for the growth of
India’s growing economy, hence monitoring trade aspect on domestic and International markets is a must. As a registered trader, you are keen to know about GST, tax filing, refunds etc. Its yet unclear if the new GST will ease trade sector or complicate? Many sectors have their fingers crossed, yet there are fair chances for withdrawal of various tax exemptions and modifications to the Foreign Trade Policy.

What is Export of goods under GST?

According to IGST Act Section 2(5), Export of goods refers to the process of taking the goods outside India. Export implies Trading, an act of supplying goods and/or services outside India.

What’s Export of Services under GST?

As per IGST Act Section 2(6) “Export of services” refers to the supply of any services in the following cases:

  • When the supplier of service is within India

  • The recipient of service is outside India.

  • The location of supply of service is outside India.

  • When the payment for the service has been received by the supplier of service into foreign currency exchange.

How is Export treated under GST?

Under GST law, exports of goods and services is considered as:

The supply of goods and/or services during import and export is termed asInter-State trade.
“Integrated Goods and Services Tax” (IGST)  refers to the tax levied under 7(5) of the IGST Act on the supply of any goods and /or services during inter-State trade.

Zero rated supply–
According to Section 6(1) of the IGST Act, goods or services exported GST will not be applicable or levied at the input stage or in the final stage of the product.

  • GST is not levied on the goods/services exported from India. If the supply of goods is certified as “Export out of India” according to the place the goods are supplied, then the transaction is
    considered as “zero-rated supply”.

  • The supplier is allowed to export the goods/services without charging any tax and can avail the
    CGST / SGST and IGST  credits paid on the input services. However, if the individual is unable to use the credit claimed then they are eligible to claim the refund according to section 38 of CGST Act 2016.

Implementation of GST is one of toughest decision taken by the Indian government. The transition of GST regime will not be easy, leading to several confusions and legal complications arising of out GST law. The Indian Tax structure is currently not yet in place but in the long run its bound to transform India as a favorable nation for foreign investments. As a registered tax payer or a business man, GST not only helps India to
develop economically but also helps you to track your business activities when ought to be mentioned in the GST business activity statement.

We have a team of experts at uBooks to assist you to file your GST returns.

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