Introduction
In 2016, the Indian government introduced the Goods and Services Tax (GST) all over the country. This was done to make how the government collects taxes more flexible. Well, GST (Goods and Services Tax ) affects different parts of the country’s taxation system in different ways. One important part that gets affected is the imports and exports of the country. Exports and imports are important contributors to our country’s economy or revenue generation, so it’s really crucial to see the impact of GST on exports and imports.
But wait, many eCommerce business owners are unsure about how the GST might affect exporting different kinds of goods. If this is something that’s been on your mind, too, don’t worry – we’ve got your back! Keep reading this blog to know how the GST on exports is influencing this sector in India.
If you run an eCommerce store and want to start exporting items, there’s something you need to do first is to apply for GST on export. Don’t worry; applying for GST is actually quite easy and can be done in just a few steps. Make sure you have all the necessary documents ready. You can also find detailed information about this process on the government’s official website.
Effect on Exporting Goods and Services
The GST council has labeled exports of goods and services as a zero-rated supply, meaning that no GST will be charged on these exports. Under the new GST plan, a duty drawback will be given for the customs duty paid on imported goods. These imports should be used for manufacturing purposes. Similarly, duty drawback will also be available for central excise duty. This can be claimed for certain imported items like tobacco and petroleum products used as fuel for captive power generation.
For exporters dealing with zero-rated goods under GST, there’s an option to claim a refund for these supplies. This refund of GST on exports can be done in two ways:
- For Goods/Services Under Bond or Letter of Undertaking:
If the goods or services are covered under a bond or Letter of Undertaking to ensure integrated tax payment, the exporter can apply for a refund of the unused input tax credit. This application of GST on the export of goods can be submitted on the GST portal or through a GST facilitation center.
- For Agencies of UN or Embassies:
In case the exporter is a United Nations agency or an embassy mentioned in section 55 of GST safeguards, they can claim a refund as specified in section 54 of the CGST Act. For this, they need to provide the shipping bill to request a refund of the IGST (Integrated Goods and Service Tax) paid.
To claim the GST on export, you’ll need the following documents:
- A copy of the duty payment receipt
- A copy of the invoice
- Proof that the tax burden hasn’t been passed on
- Any other documents required by the government
Understanding these rules can help exporters navigate the process and make the most of the GST system when it comes to exporting goods and services.
What is the meaning of IGST (Integrated Goods and Services Tax)?
IGST’s full form is Integrated Goods and Services Tax. It’s like a combination of Central GST and State GST. When goods and services move between different states in India, the central government levies IGST on these transactions. This helps keep track of the taxes paid and ensures a smooth process of tax credits when things move across states.
What is the meaning of ITC (Input Tax Credit)?
Input Tax Credit, or ITC for short, is a bit like balancing your books. Imagine you pay taxes when you buy things (input) to make something. Then, when you sell what you’ve made (output), you pay taxes again. But if the taxes you’ve already paid on the things you bought (input) are more than the taxes you need to pay on what you sell (output), then you get a credit for the extra taxes you’ve already paid. This credit can be used to reduce the taxes you need to pay later.
Now, Let’s Know About Deemed Exports
The recent changes in GST on exports have brought about some new rules. In these changes, a few goods and services will be treated almost the same way as exports. Here’s the scoop on these special cases:
- Supply for Advance Authorisation
When a registered person provides goods and services against Advance Authorisation, it’s kind of like an export.
- Supply to Export-Oriented Undertakings (EOUs)
If someone sells things to special places like Hardware Technology Park units, Software Technology Park units, or Biotechnology Park units, it’s also treated like exports.
- Supply of Capital Goods with Export Promotion Capital Goods Authorisation
When a registered person supplies capital goods against the Export Promotion Capital Goods Authorisation, it’s counted as exports.
- Supply of Gold by Banks or Public Sector Undertakings (PSUs)
If a bank or a Public Sector Undertaking gives out gold against Advance Authorisation as per Customs law, that’s treated as an export-like deal too.
When it comes to filing returns for deemed exports under GST, you’ll follow the same steps and procedures as you would for regular exports under GST.
Summing Up!
Exports are encouraged in India, and for this reason, various ecommerce export programs have been launched to ease the export procedures like GST on export. Amazon Global Selling is one of the remarkable e-commerce export programs that opens up a world of opportunities for Indian sellers and MSMEs. Through this innovative initiative, these entrepreneurs can seamlessly extend their products from India to global marketplaces spanning more than 200 countries and territories. This expansive reach empowers them to tap into diverse international customer bases and take their businesses to new heights. From the initial registration to crafting attractive product listings and ensuring hassle-free shipping, Amazon Global Selling offers an array of comprehensive tools and solutions tailored for global success.
The program’s impact is undeniable as it allows exporters to connect with over 300 million customers worldwide. This huge customer base not only brings significant exposure but also provides the potential for exponential growth. By removing geographical barriers and facilitating cross-border transactions, Amazon Global Selling has redefined the way businesses approach international trade.
Write and Win: Participate in Creative writing Contest & International Essay Contest and win fabulous prizes.
