Meaning of Import and Export of Goods under GST
Under GST, import of goods entails bringing goods into India from a foreign country, which is considered an inter-state supply and is taxable under the IGST Act. The importer is required to pay Integrated Goods and Service Tax (IGST) on such imports, which adds to the cost of the goods as the tax paid can be availed as input tax credit.
The GST regime classifies exports as zero-rated supplies, allowing exporters to claim refunds on input tax credits, thereby reducing the cost burden and enhancing business competitiveness internationally.
GST act compliance can significantly impact a business's financial health, and maintaining accurate GST filings is critical for showcasing a business's credibility and financial stability to lenders. Timely and accurate GST returns can enhance a business’s loan eligibility, as many financial institutions consider GST compliance as a parameter to assess the creditworthiness and operational efficiency of a business.
Meaning of Import and Export of Services under GST
GST considers both import and export of services based on certain criteria:
- Location of the Supplier: For a service to be considered an import, the supplier must be located outside India.
- Location of the Recipient: Conversely, for a service to be considered an export, the recipient of the service must be located outside India.
- Place of Supply: The place of supply of services also plays a crucial role in determining whether a service is imported or exported.
Features of Export under GST scheme
Export of goods and services under the GST regime has several key features:
- Zero Rated Supply: Exports are treated as zero-rated supplies which means exporters can claim a refund on taxes paid on inputs.
- No Tax on Sale: There is no GST charged on the sale of exported goods or services.
- Compliance Benefits: Exporters benefit from various compliance relaxations and streamlined procedures under the GST framework.
Deemed Exports under GST
Deemed exports refer to certain types of transactions in which the goods supplied do not leave the country and the payment for such supplies is received either in Indian rupees or in convertible foreign exchange. Key points include:
- GST Refund: Suppliers can claim a refund of GST paid on deemed exports.
- Eligibility Criteria: Specific criteria define what qualifies as deemed exports under GST.
- Documentation: Adequate documentation is required to support the claim for deemed exports.
Treatment of Exports under GST
Exports under GST are treated as zero-rated supplies which means no GST is paid on them but credit of input tax is availed. This treatment helps in making exported goods and services more competitive in the international markets as well as helps in maintaining the liquidity for exporters by allowing refunds for taxes paid on inputs.
Forms for Refund
Under GST, specific forms are provided for claiming refunds:
- RFD-01: Form used by taxpayers to file for a refund claim under various circumstances including export.
- RFD-02: Acknowledgment issued upon filing of refund application.
- RFD-03: Deficiency memo issued if there are any errors in the application.
Conclusion
Understanding the GST implications on the import and export of goods and services is crucial for businesses to ensure compliance and optimise tax benefits. For exporters, the zero-rated benefit is particularly advantageous as it enhances competitiveness while preserving cash flow. Businesses looking to expand globally should consider securing a business loan to effectively manage initial export-related expenses and leverage growth opportunities in international markets.
