Since the introduction of the Goods and Services Tax (GST) in India, businesses have been trying to understand its various provisions. One such provision is the zero-rated export of goods and services. It is an important concept that businesses need to be aware of to ensure that they are following the correct procedures while doing their exports. In this blog, we will take a detailed look at the zero-rated export of goods and services under GST and also discuss the relevant provisions that need to be kept in mind.
In the realm of GST, exports play a crucial role in promoting international trade and boosting the economy. However, it’s essential to understand the qualifying conditions and the meaning of export under GST. In this blog post, we will delve into the intricacies of exports and shed light on the conditions that must be fulfilled for a supply of goods or services to qualify as an export and in the second part of the article we will deal with Zero Rated Supply (Export of Goods or Services)
Under the Goods and Services Tax (GST) Act, export refers to the supply of goods or services from India to a destination outside its territory. It encompasses transactions that contribute to foreign exchange earnings and support the growth of the nation’s economy. To ensure that a supply can be classified as an export under GST, certain conditions need to be fulfilled. Let’s explore these qualifying conditions:
The zero-rated export of goods and services refers to the export of goods or services where no tax is levied on them. In other words, it means that such goods or services are taxed at 0% under GST. This is done to ensure that the exports are not burdened with taxes and can compete in the international market. However, it is important to note that this zero rating only applies to the final export of goods or services and not the goods or services that are used in the production of those exports. To claim zero rating for exports, businesses must comply with the following conditions:
Under GST, the procedure for zero-rated exports is simplified with the introduction of the Export LUT/Bond process. To avail of this process, the exporter needs to file an LUT or a bond to the proper officer. The LUT or bond needs to be furnished online on the GST Portal, which is a straightforward process. Once the proper officer verifies the LUT or bond, the exporter can undertake export transactions without having to pay any tax.
In addition to the conditions mentioned above, it is important to note that certain services are also eligible for zero rating under GST. These services include transportation of goods from India to a place outside India, the supply of goods or services to a Special Economic Zone (SEZ), and the supply of goods or services to an exporter who holds the benefit of a refund of the duty paid on goods supplied.
Note: The information provided above is based on current understanding and may be subject to change. For detailed and up-to-date information, please refer to official GST guidelines and consult professional advisors.