Deemed Export Under GST

Deemed Export Under GST | Meaning, Requirements, Differences, Procedure and Supplies

January 27, 2024 / GST / By

Deemed Export Under GST: The term ‘deemed export’ comes under the indirect tax system. It is not a new concept of the term, and it revolves around foreign trade policies and schemes. However, under GST, deemed export is present in the IGST Act.

Meaning of Deemed Exports under GST

People can export goods outside India, and it is called jargon. Such products that are shipped are assumed to be zero-rated goods under the GST rule. The Central Government has notified that specific categories of goods can come under the subsection on deemed goods or deemed exports. The meaning of it is that the goods that come under deemed exports will be considered a part of export goods even if they are not exported.

Requirements to Qualify Goods as Deemed Exports

The conditions that will determine if certain goods or supplies of products will come under Deemed Exports of the GST are as follows.

  1. If the products or supplies are only material products and not services
  2. If people do not export the products outside India
  3. If there are some goods that people need to export outside India, they have to notify the Central Government according to the Deemed exports under Section 147 of the CGST Act of the Central Goods and Services Tax law of 2017.
  4. If the goods are manufactured or are produced in India, then they will come under Deemed export.
  5. If the products are made under bond/ LUT, then they do not qualify as Deemed Exports. However, the rest of the product through other mediums can come under the term.
  6. The payment for the goods can be in Indian Rupees or other convertible foreign exchange currency.
  7. The people who buy it have to pay tax at the time of buying it. If there is a refund of tax for the items, then they can claim it afterward.

Supplies Notified as Deemed Exports under the GST

The CGST notification no. of 48/2017 of Central Tax dated 18th October 2017 has informed that the following supply of products deemed exports:

  1. Registered people can do the supply of products against Advance Authorisation or AA. It means that the supplier must be registered under the GST, and the recipient must be the holder of an Advance Authorisation holder.
  2. Registered people can do the supply of the capital goods against the export promotion of capital goods authorisation or EPCG.
  3. The supply of goods by registered people to Export Oriented Unit or EOU or Electronic Hardware Technology Park Unit or EHTP or Software Technology Park Unit or STP and biotechnology park unit or BTP
  4. The supply of gold to a client by a bank or the public sector undertaking against AA
  5. Note: People should know that the Deemed export also has a definition under the Foreign Trade Policy of 2015 to 2020 or FTP. Though the definition of deemed export under FTP is different from the GST law definition, it is best not to consider it while applying for a GST provision. This is because the motive or purpose of the two legislations is varied.

Difference Between Deemed Exports and Other Exports

Suppose a dealer is located in Rajasthan and sells goods to another Dealer who is an EU. If the second dealer sells the goods to a customer in Germany, then the dealer from Rajasthan sold to the next dealer comes under deemed exports. Therefore, the supply to the second dealer to the customer is under exports.

Taxability of Deemed Exports under the GST

Under deemed exports, the supplies are not zero-rated by default like exports. Here, all deemed exports and supplies are subject to GST at the point of collection. The products cannot be manufactured under any Bond or LUT without payment of tax. People have to pay tax on such a supply and then be claimed as a refund.

People can claim the condition that is subject to certain conditions according to their role. The supplier of goods or recipient of gods can get a refund for the tax. People should know that the recipient is not eligible to claim the input tax credit or ITC if a refund of tax paid is claimed by the suppliers.

What are the Additional Conditions for Deemed Exports to EOU/ STP/ HTP?

The EOU/ STP/ HTP/ BTP units must provide the recipient prior intimation by filing Form A to the supplier and the jurisdiction GST officer of supplier and recipients. Form A should bear a running serial number containing the details of goods that the dealer wants to procure. The Development Commissioner has to preapprove the goods before procuring them.

Next, the supplier has to supply the goods according to the cover of a tax invoice. Furthermore, the tax invoice recipient should have an endorsed copy of the same and send it to the supplier and the jurisdictional GST administrator of the recipient and supplier. Finally, the recipient must record such goods they received to the EOU/ STP/ BTP/ EHTP unit through Form B.

Procedure to Refund GST Paid on Deemed Exports

There are certain documents required to claim a fund for filing. For example, if the supplier claims a refund of the tax they paid on deemed exports, the instructions are as follows.

  1. A statement containing the invoice wise details of the deemed export suppliers of the supplier
  2. Acknowledgment of the jurisdictional tax officer of the AA or EPCG holder that says that they have received the OR in case of EOU/ STP/ EHTP/ BTP of the deemed export supplies or the copy of tax invoice the recipient signed
  3. Undertaking by the recipient claiming that they have not claimed any ITC
  4. Undertaking by the recipient that they shall not claim a refund in such supplies

Refund Form

If the supplier of the recipient wants to obtain a refund for the tax they paid on deemed exports, then they have to apply Form FST RFD 01 along with the supporting documents. Then, they can claim it online and process the refund if it is applicable. They can file a refund within a range of two years from the date when the return related to such supplies has finished electronically.

The information is also present in CGST notification no. 49/ 2017 on 18th October 2017. One can also set out the list of the evidence about the supplier of the export items. They have to fill out the declaration in statement 5B and Annexure one of the RFD 01 refund application.

People can utilize the ITC on inputs that belong to the manufacturer of deemed exports entirely. They have to submit a CA certificate within six months of the supply. People have to provide the details of the invoices, credit notes, debit notes of the outward supplies if their supplier has claimed the refund.

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