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Deemed Export under GST

What is Deemed Export?

“Deemed Exports” refers to supplies of goods manufactured in India which are notified as deemed exports under Section 147 of the CGST/SGST Act, 2017. It is to be noted that services are not considered as deemed exports.

The supplies do not leave India. The payment for such supplies is received either in Indian rupees or in convertible foreign exchange.

Tax Treatment

Regular export are zero-rated supplies i.e no GST is applicable and also GST paid for exports will be allowed as a refund. But deemed exports are not zero-rated supplies and therefore GST is to be paid on them. Then what will be the meaning for considering it as deemed export? In case of deemed exports, although GST is payable, the tax paid can be claimed as refund either by the supplier or by the recipient.

Categories of supply of goods notified as deemed exports

Notification no. 48/2017-Central Tax dated 18.10.2017 has been issued wherein categories are defined which are considered as deemed exports:-

  1. Supply of goods by a registered person against Advance Authorisation

  2. Supply of capital goods by a registered person against Export Promotion Capital Goods Authorisation

  3. Supply of goods by a registered person to Export Oriented Unit

  4. Supply of gold by a bank or Public Sector Undertaking specified in the notification No. 50/2017-Customs.

Who can file refund application in case of Deemed Exports supplies

Application for the refund in case of deemed exports can either be filed by the recipient of deemed export supplies and can also be filed by the supplier. If a supplier wants to file for the refund then he needs to get an undertaking from the recipient that he has not availed the input tax credit on such supplies and supplier can take the refund.

If the supplier has taken the refund then the recipient can claim the refund of input tax credit availed in respect of input and input services used in making the zero-rated supply of goods or services or both.

Further rule 96(9) of CGST rules provides that recipient of services cannot export on payment of integrated tax when the refund is claimed by the supplier.

Time Limit for filing refund claim

Application in Form GST RFD-01is to be filed within 2 years from the date on which return relating to such deemed export supplies is furnished. A statement containing number and details of invoices is to be furnished along with Form GST RFD-01.

Procedure in case of supplies to EOU/EHTP/STP/BTP Units

  1. The recipient EOU / EHTP / STP / BTP unit shall give prior intimation in a prescribed proforma in “Form–A” (appended herewith) bearing a running serial number containing the goods to be procured, as pre-approved by the Development Commissioner and the details of the supplier before such deemed export supplies are made. The said intimation shall be given to –

  2. the registered supplier

  3. the jurisdictional GST officer in charge of such registered supplier

  4. it’s jurisdictional GST officer.

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

  6. 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 –

  7. the registered supplier

  8. the jurisdictional GST officer in charge of such registered supplier

  9. it’s jurisdictional GST officer.

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

  11. The recipient EOU / EHTP / STP / BTP unit shall maintain records of such deemed export supplies in digital form, based upon data elements contained in “Form-B” (appended herewith). The software for maintenance of digital records shall incorporate the feature of the audit trail. While the data elements contained in the Form-B are mandatory, the recipient units will be free to add or continue with any additional data fields, as per their commercial requirements. All recipient units are required to enter data accurately and immediately upon the goods being received in, utilized by or removed from the said unit.

The digital records should be kept updated, accurate, complete and available at the said unit at all times for verification by the proper officer, whenever required. A digital copy of Form – B containing transactions for the month, shall be provided to the jurisdictional GST officer, each month (by the 10th of the month) in a CD or Pen drive, as convenient to the said unit.

The above procedure and safeguards are in addition to the terms and conditions to be adhered to by an EOU / EHTP / STP / BTP unit in terms of the Foreign Trade Policy, 2015-20 and the duty exemption notification being availed by such unit.

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