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It has been quire some time that our country has been following the GST (Goods and Services Tax) regime. However, it is super important for businesses to understand the various terms in this regime, so that they have complete knowledge and can implement them stringently.

Lets delve deeper in the field, and talk about deemed exports in GST – a seemingly simple term, but one that is super critical to all kinds of businesses.

Meaning of Deemed Export in GST:

We all know what is meant by the term ‘export’ – it is the process of supplying any good that is produced or manufactured within a particular country on a global scale. It contributes to the growth of the economy, and enhances the flow of international trade.

The term deemed export in GST falls under the jurisdiction of section 147 of the CGST Act, 2017. According to it, an item falls under the category of deemed exports in case it meets the following conditions:

  • The supplies include only goods and not services that are manufactured in India. It specifies that the goods produced should not leave India.
  • The payment for such goods is accepted only in Indian currency, or in a form of convertible foreign exchange.

It is important to note that the Foreign Trade Policy 2015-2020 has also defined ‘Deemed Exports’. The GST provisions may tend to differ; hence the two definitions should not be compared or used interchangeably.

Supplies Notified To Be Deemed Exports Under GST:

It is important to have knowledge about the various categories that are considered to be ‘Deemed Exports’, under section 17 of the CGST Act, 2017 – here they are:

  • The supply of goods by a registered person against Advanced Authorization
  • Capital goods that are supplied by a registered person against Exports Promotion Capital Goods Authorization
  • The supply of goods by a registered person to an Export Oriented Unit/Software Technology Park/Biotechnology Park/Electronic Hardware Technology Park
  • Gold that is supplied by a Bank or Public Sector Undertaking against Advance Authorization
  • To understand the concept better, let’s take a deemed export under GST example. Let’s say, Dealer A (located in Uttar Pradesh) sells goods produced in a manufacturing unit to Dealer B that is an Export Oriented Unit. Dealer B further sells the same goods to Dealer C – a client in France.
  • Now, in this scenario, the goods that are supplied from Dealer A to B are considered to be deemed exports, as they fulfill all conditions. In the latter transaction, the goods are simply termed as exports.
  • Taxability of Deemed Exports Under GST

  • It is imperative for businesses to have clear and transparent understanding on the latest taxation laws. If you are not aware of the taxation regulations for deemed exports, your business may miss out on complying with the correct laws, and this may result in a monetary fine or legal penalty. Let’s gain some useful insight on the taxability procedure of deemed exports under the GST regime.
  • We need to know that unlike export goods, deemed exports are not considered to be zero-rated supplies. This means that all categories of deemed exports will be subject to GST at the point of supply. Hence, supply of goods cannot be made on Bond or Letter of Undertaking without the payment of tax. Once the tax is paid in full on the supply of goods, a refund can be claimed at a later stage.
  • The refund on the taxation of deemed exports can be claimed by either of the following persons:
  • The supplier of the goods OR
  • The recipient of the goods

Also check: How to Pay GST Challan Payment Online?

Refund Procedure For GST Paid On Deemed Exports:

It is vital for business organizations to follow the correct procedure while applying for a refund for the tax paid for deemed exports. Here is the step-by-step process that can be followed as a guide:

  • Establish Documentary Evidence: The supplier who is claiming the refund on tax paid for deemed exports needs to furnish the following documents:
  • The statement that contains the invoice-wise details of all the goods supplied.
  • Acknowledgement of receipt of goods by the jurisdiction tax officer of AA or EPCG holder.
  • A formal undertaking by the recipient of goods that tax has not been claimed.
  • Fill The Refund Form: In order to claim for the refund, the supplier needs to fill up an application in the form GST RFD-01 with all the supporting documentary evidence.
  • Time Period: The refund claim can be filed within a time period of two years from the date on which the refund is electronically generated.

The current business environment is competitive and fast-paced. In such a scenario, it is important for organizations to remain aware about all the regulations with respect to the taxation of Deemed Exports under GST. It will help your organization to follow the mandatory legal requirements and ensure that all formalities are completed within time. This will save any hassles in the future, and ensure that operation efficiency is maintained!



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