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Goods & Services Tax (GST)


Frequently Asked Question (FAQ)
Goods & Services Tax (GST)

Question: GST Exports
Question: GST General
Question: GST Rates
Question: Composition Levy
Question: GST MSME
Question: GST Textile
Question: What are the changes made in Duty Drawback Scheme to allow the existing drawback for exports made in the GST regime?
In order to ensure smooth transition to the GST regime, Government has allowed the current Duty Drawback scheme to continue for a period of three months, i.e. from 1.7.2017 to 30.9.2017. The exporter during this period, continues to claim the composite rates, i.e. rates and caps given under columns (4) and (5) respectively of the Schedule of AIRs of duty drawback. During the transition period, exporters can also claim Brand rate of duty/tax incidence as they have been doing earlier. The conditions imposed for claiming these composite rates aim to ensure that the exporters do not claim composite AIRs of duty drawback and simultaneously avail input tax credit of Central Goods and Services Tax (CGST) or Integrated Goods and Services Tax (IGST) on the export goods or on inputs and input services used in manufacture of export goods or claim refund of IGST paid on export goods. Further, an exporter claiming composite rate shall also be barred to carry forward Cenvat credit on the export goods or on inputs or input services used in manufacture of export goods in terms of the CGST Act, 2017.
Question: Can we claim Input Tax Credit with Duty Drawback in the period from 1.7.2017 and 30.9.2017?
While a transition period of three months has been allowed, the exporters shall have an option to claim only Customs portion of AIRs of duty drawback, i.e. rates and caps given under column (6) and (7) respectively of the Schedule of AIRs of duty drawback and avail input tax credit of CGST or IGST or refund of IGST paid on exports.
Question: If we are preparing invoice for exports, should we apply customs exchange rate for payment of IGST?
The rate of exchange for the determination of the value of taxable goods or services or both shall be the applicable reference rate for that currency as determined by the Reserve Bank of India on the date of time of supply in respect of such supply in terms of section 12 or, as the case may be, section 13 of the CGST Act.
Question: We are supplying under “Deemed Exports”. How can we claim refund?
 Please ensure that the supply you are effecting is classified as deemed exports as the category may have undergone a change in GST. However, if it is covered as deemed exports, you will have to charge the applicable GST. The refund, if any, shall be claimed by the recipient. Please go through section 147 of CGST Act.
 
 
Question: If we pay IGST on exports, what application has to be filed for claim of the same and let us also know the procedure for the same?
For refund of integrated tax paid on goods exported out of India, no application is required to be filed. The shipping bill filed by an exporter shall be deemed to be an application for refund of integrated tax paid and such application shall be deemed to have been filed only when:- (a) the export manifest or an export report covering the number and the date of shipping bills or bills of export; and (b) the applicant has furnished a valid return in FORM GSTR-3; (2) The details of the relevant export invoices contained in FORM GSTR-1 shall be transmitted electronically by the common portal to the system designated by the Customs and the said system shall electronically transmit to the common portal, a confirmation that the goods covered by the said invoices have been exported out of India. (3) Upon the receipt of the information regarding the furnishing of a valid return in FORM GSTR-3 from the common portal, the system designated by the Customs shall process the claim for refund and an amount equal to the integrated tax paid in respect of each shipping bill or bill of export shall be electronically credited to the bank account of the applicant mentioned in his registration particulars and as intimated to the Customs authorities.
 
Question: We get order from a foreign agent abroad to whom we pay commission. Will it be taxable under GST?
The foreign agent, who facilitates the supply of goods , is included within the definition of intermediary. The place of supply of service for services provided by intermediary would be the location of service provider, i.e. the place where he is registered. Since a foreign agent is located outside India and not registered in India, the commission paid to him will not be taxable.
Question: How GST will be paid on the conversion of foreign currency? Will it be on full value after conversion or some other formula will be applied?
 For a currency when exchanged to Indian Rupee, the value of taxable purpose shall be equal to the difference in the buying rate /selling rate, as the case may be, and the RBI reference rate for the currency at that time multiplied by the total value of unit. In case RBI reference rate is not available for the currency, the value will be gross amount of Indian Rupee provided or received by the person changing the money.
 
Question: Can you suggest the same with an example for better clarity?
 For example, if a person converts USD 1000 @ Rs 63 and RBI reference rate is Rs 64, then the taxable value will be (Rs 64-63 x 1000) Rs 1000 on which applicable GST will be charged. If a person converts 1000 Turkish Lira  at Rs 18.50  assuming there is no RBI reference rate, taxable value will be 1% of Rs 18500 = Rs 185 on which applicable GST will be charged.
 
Question: Whether factory stuffing facility under excise supervision continues under GST?
Under the GST, it has been decided to do away with the sealing of containers with export goods by CBEC officials. Instead, self-sealing procedure is allowed, with effect from 1st September 2017, subject to the following: a) The exporter shall be under an obligation to inform the details of the premises whether a factory or warehouse or any other place where container stuffing is to be carried out, to the jurisdictional customs officer. b) The exporter should be registered under the GST and should be filing GSTRI and GSTR2. Where exporter is not a GST registrant, he shall bring the export goods to a Container Freight Station/Inland Container Depot for stuffing and sealing of container.
However, in certain situations, an exporter may follow the self-sealing procedure even if he is not required to be registered under GST Laws. Such an exception is available to the Status Holders (One, Two, Three, Four and Five Star Export Houses) recognized by DGFT under a valid status holder certificate issued in this regard. 
It has been decided that the above revised procedure regarding sealing of containers shall be effective from 01.09.2017. Therefore, the existing practice of sealing the container with a bottle seal under Central Excise supervision or otherwise would continue.
 
 
Question: What will be the exact procedure of obtaining permission from Customs?
The exporter shall inform the jurisdictional Custom Officer of the rank of Superintendent or Appraiser of Customs, at least 15 days before the first planned movement of a consignment from his factory/premises, about the intention to follow self-sealing procedure to export goods from the factory premises or warehouse. The jurisdictional Superintendent or an Appraiser or an Inspector of Customs shall visit the premises from where the export goods will be stuffed and sealed for export. The jurisdictional Superintendent or Inspector of Customs shall inspect the premises with regard to viability of stuffing of container in the premises and submit a report to the jurisdictional Deputy Commissioner of Customs or as the case may be the Assistant Commissioner of Customs within 48 hours. The jurisdictional Deputy Commissioner of Customs or as the case may be the Assistant Commissioner of Customs shall forward the proposal, in this regard to the Principal Commissioner/Commissioner of Customs who would grant permission for self-sealing at the approved premises. Once the permission is granted, the exporter shall furnish only intimation to the jurisdictional Superintendent or Customs each time self-sealing is carried out at approved premises. The intimation, in this regard shall clearly mention the place and address of the approved premises, description of export goods and whether or not any incentive is being claimed. 
 
Question: How soon will refund of ITC in respect of export of goods or services be granted during the GST regime?
In case of refund of tax on inputs used in exports:
 
-Acknowledgement will be issued within 15 days from the date of application for refund
 
-Refund of 90% will be granted provisionally within seven days of acknowledgement of refund application.
 
-Remaining 10% will be paid within a maximum period of 60 days from the date of receipt of application complete in all respects.
 
-Interest @ 6% is payable if full refund is not granted within 60 days.
Question: What is the procedure for IGST refund on exports?
 No application for refund is to be made for IGST as the Shipping Bill itself is a claim for refund. In the case of refund of IGST paid on exports: Upon receipt of information regarding furnishing of valid return in Form GSTR-3 by the exporter from the common portal, the Customs shall process the claim for refund and an amount equal to the IGST paid in respect of each shipping bill shall be credited to the bank account of the exporter.
 
 
Question: Will the principle of unjust enrichment apply to exporters or not?
 The principle of unjust enrichment is not applicable in case of exports of goods or services as the recipient is located outside the taxable territory.
 
Question: Unfortunately it is still not clear for us what is the correct declaration to be provided in the Shipping Bill for Drawback: DBK001, DBK002, DBK003. The all India rates of Drawback are not giving any higher rates of Drawback. For example Chapter 28/29 has approximately 1.1%& Drawback. Can you please enlighten us?
The drawback rate, both when Cenvat is availed and Cenvat is not availed, is the same  which shows that the drawback rates only factor the basic customs duty on the inputs used in such exports. In such situation, you can claim the drawback benefit (stating that you are claiming lower drawback benefit as given in column 6 of the drawback schedule, though it is irrelevant) and claim either IGST refund or ITC refund or carry forward of Cenvat benefit. If you want to claim IGST refund (after adjusting ITC) on exports, you may give the declaration DBK002 and DBK003. If you want to claim ITC refund (exporting without payment of IGST against execution of Bond/LUT), you may give the declaration DBK001 and DBK003.
 
Question: Where we have to file our claim for GST refund as the jurisdiction of authority is not known to us?
 The refund for ITC or IGST would be filed on the common portal (GSTN) and not to any tax authorities. The approval for the same will be given electronically and amount of refund will be credited to your bank account.
 
Question: We are merchant exporters with principal place of Business as Chennai. We are outsourcing the material for exports from Andhra Pradesh (AP) and are exporting from port at Krishnapatnam in AP. We have no registered branch office in AP. Are we required to register at AP for additional place of business? Where to mention Code of Chennai and AP in the shipping bill?
 Please bear in mind that the principal place of business and additional place of business are confined to a State only. If you are outsourcing the material for exports from AP, you need not register in AP as only the supplier is required to be registered in the State from which goods are being supplied. In the shipping bill, State code of the exporter is required to be quoted at master level which is the first two digit of the GSTIN of the exporter, where you will give code of Tamil Nadu. At the item level, you can give the State of Origin which should be the State from which goods were procured for exports, where you will mention AP.
 
Question: We are a Merchant Export House. Our Principal place of Business is Mumbai, with a Branch in Rajkot. Our Activity in Rajkot is Inspection, Packaging and Painting of various goods purchased from Gujarat. In the Pre-GST regime, we used to buy Goods from various suppliers in Rajkot and send them to our Branch Office for inspection, painting and packaging, and export out of our Rajkot Office through Mundra Port. What will be the procedure in GST regime?
Since you have business interest in Mumbai and Rajkot, I am sure, you are having two separate GSTIN for Maharashtra and Gujarat. Your Gujarat unit will raise an invoice on Maharashtra by paying the applicable IGST. When you export to Mundra under LUT, you are not required to pay IGST. The IGST paid by you for supply from Unit in Gujarat will be available as Input Tax Credit (ITC) which in case of export would be refunded through the formula prescribed for such refund.
 
Question: Whether commission received by Indian Buying Agent from foreign customer in foreign currency is exempted from GST? Does Buying Agent need to register for GST?
 The commission received by buying agent in India will be taxable. The buying agent should register so that he/she can claim ITC to lessen his/her liability by using ITC
Question: We have been given LUT acceptance valid till 31.3.2018 whereas I am given to understand that the LUT would be valid for 1 year from the date of acceptance. Would appreciate knowing which is the correct date?
Legal Undertaking (LUT) is valid for a Financial Year (201718 for this year). Thus all LUTs executed from 1st July onwards will be valid till 31st March, 2018. There is, however, no validity of a bond which is a running account as debiting /crediting is allowed in a bond.
 
Question: Whether goods sent by an exporter to a job worker will be liable to GST?
 No, the goods sent by an exporter to a job worker is not a supply, as there is no transfer of title and no consideration for the goods is involved. In terms of section 143 of the CGST Act, 2017 a registered taxable person (the principal) may send any inputs or capital goods, without payment of GST, to a job worker for job work and the principal shall either i) bring back such inputs or capital goods after completion of job work or otherwise within the prescribed period, i.e. 1 year in case of inputs and 3 years in case of capital goods, or ii) supply such inputs or capital goods within such prescribed period on payment of tax within India, or with or without payment of tax for export, as the case may be.
If the goods or, capital goods, as the case may be, are not returned to the principal within the time specified above, the same shall be deemed to have been supplied by the principal to the job worker on the date the goods were sent out to the job worker and the principal shall be required to pay tax accordingly on such supplies.
 
Question: We are textile manufacturer and have stocks carried forward on 1st July. Will I get benefit of GST on such stocks?
Full credit of the tax paid on the stocks would be available if the documents evidencing tax payment are available. However, if only documents relating to procurement are available with no documents evidencing tax payment, deemed credit would be admissible in respect of textiles only if the goods were taxable under the Central Excise Act. Such credit would be available after the tax has been paid on supply of these goods. This facility is available for 6 months period only or till the date of sale of such stock whichever is earlier and is limited to 40% of the central tax paid by you.
 
Question: We get orders from NCR exporters for supply of goods for which material is supplied by exporters. Do we charge GST when we return the goods and at what rates?
The services provided by you fall under the category of job work by virtue of the definition of job work provided under Section 2 (68) of the CGST Act, 2017. The rate for job work is 18%. Except for few processes for which it is 5%. You should thus charge 18% on jobbing charges.
 
Question: We have stock of GST paid inputs as well as inputs from preGST period and if inputs from both lots are used in export goods, what shall be Drawback on such exports?
During the transition period up to 30th September, 2017, exporters can avail drawback at higher rate subject to the conditions that no Input Tax Credit (ITC) of CGST/IGST is claimed, no refund of IGST paid on export goods is claimed, and no CENVAT credit is carried forward

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