Managing invoices and following the prescribed rules is vital to export under GST. The registration process is mandatory for goods or services exported to places not included in the domestic territories. Registration allows exporters to leverage the schemes in terms of the current taxation policy.
Generally, when you export under GST, it is considered as a zero-rated supply. In other words, GST will not be imposed on any goods or services you provide that are registered under GST.
To claim the benefits of export goods or services, exporters must adhere to the government’s options.
- Exporters can provide a Letter of Undertaking (LUT) without paying IGST fees. But, LUT is valid only for one fiscal year. Therefore, Exporters must apply for a new LUT each FY.
- Exporters may also include the IGST payment details and later entitle a refund for the same.
Necessity seeds innovations. The COVID-19 pandemic has stirred the economic crisis globally. It made India believe in “Aathma nirbhar.” The government of India has notified various tax relaxations to increase the export of goods and services in India. Thus, several tax benefit regimes are introduced to avoid the burden of domestic taxes on exporters.
Besides, exporters are requested to follow specific rules and procedures. Maintaining accurate documentation can help exporters avail of the tax benefits. Imprezz.in, the best GST billing software in India, enables exporters to be GST compliant concerning the GST updates. You can file your GST annual returns under the specified rules with zero hassles. In this article, we have listed the rules to follow when you export under GST.
Rules to Be Followed on Exports Under GST
Rule – 1
PAN (Permanent Account Number) is legalized as the symbol of import and export by the DGFT (Directorate General of Foreign Trade). Exporters will have to create their quotes for the same. It is applicable if the exporter deals either with goods exempt under GST or products outside the GST system.
Rule – 2
Invoicing with GSTIN on shipping bill is mandatory when exporting products concerning GST for domestic clearance.
Rule – 3
In case of exports carried out by special agencies under the United Nations Organization or notified Multilateral Financial Institutions, Embassies, and deputations, the exporter can quote Unique Identity Number (UNI) instead of GSTIN, in the Shipping Bill.
Rule – 4
Without GSTIN/PAN/UIN, the shipping bill cannot be filed.
Rule – 5
The claim for refund on IGST or Input Tax Credit paid, inputs consumed in exported goods cannot be processed without GSTIN and GST Invoice details in the Shipping Bill.
Rule – 6
Exporters must provide information on Commercial Invoices in the Shipping Bill. Wherever Commercial Invoice is different from a Tax Invoice, details of both have to be provided in the Shipping Bill.
Rule – 7
GSTIN numbering scheme includes the state code. However, in the Shipping Bill concerning the field “State code of origin,” exporters must declare the state code from where export goods originated. The process remains the same as it was being done before.
Rule – 8
The taxable value and Tax amount should be mentioned against each item in the Shipping Bill for processing the refund amount. The same GSTIN holder issued multiple tax invoices are allowed only in one Shipping Bill for the same consignee.
Documents and Procedures for Exports Under GST
Export of Goods
- Exports under the new GST rule must acquire an IEC (Import Export Code).
- Businesses exporting goods that are exempt of IGST payments have to furnish LUT or a relevant bond.
- Documents of export must be attached to the relevant PO’s (purchase orders).
- While filing the Shipping Bill, exporters must include details as per the information mentioned in a tax invoice.
Any tax invoice furnished by an exporter must contain the details mentioned below:
- Furnish an endorsement specifying that the supply is for export either with or without integrated tax payment.
- Name, GSTIN, and address of the supplier.
- Date and invoice number.
- Details of the recipient including the name, address, delivery address, and designation.
- Include the (HSN) Harmonized System of Nomenclature Codes of goods exported. Alongside, furnish an appropriate description.
- Include the quantity of the goods and specify the units count.
- Add the gross value of the goods, breakdown of costs into the price per unit.
- Signature of the authorized signatory of the supplies.
Shipping Bills can be used to claim refund provided that:
- The person carrying the export goods files an export manifest; and
- The applicant has filed forms GSTR-3 or GSTR-3B appropriately.
Export of Services
Under Section 2(6), IGST Act, 2017, services qualify as exports only under the following circumstances.
- The suppliers of services are from India.
- The recipients of services are located in a foreign country.
- The services are supplied to a foreign country. Unless mentioned specifically, the default place of supply for cross-border transactions will be the location of the recipient.
- It is qualified as exports when suppliers of such services have received payment in convertible foreign exchange rates.
- Suppliers and recipients of services are not merely establishments of a distinct person.
Documents Required to Export Under GST
On exports carried out without the payment of IGST, furnish the LUT or a relevant bond. Maintain the Foreign Inward Remittance Certificate or Bank Realisation Certificate to avoid incurring GST charges. You can furnish them as proof of receipt within the prescribed period of one year from the date of export. Otherwise, GST is applicable to transactions in which exporters do not take this step.
Any document furnished under GST must include a service agreement. The issued tax invoice document must contain the following details:
- An endorsement, specifying whether the supply is meant for export with or without payment of integrated tax.
- Name, address, and GSTIN of the supplier.
- Invoice number and date.
- Name and address of the receiver.
- HSN Code of services and a relevant description.
- The total value of services with a stage-wise breakdown (if any).
- Signature of the supplier or authorized signatory.
As mentioned earlier about “Aatma nirbhar,” Imprezz.in is the best cloud accounting software, effectively helping India’s small businesses. The software is programmed with GST compliant invoices and quotations that enables self-employed and small business owners to create their invoices, quotes, and reminders. The cloud-based accounting software allows businesses to file GST returns directly on the portal in just a few clicks.
Amidst the on-going pandemic crisis, several businesses have failed to file GST returns on time despite the GST audit extension. Not staying GST compliant can harm growing business to a greater depth. By following these rules and documentation, exporters and young entrepreneurs can be relieved of the new taxation policy.
Instead of running all the errands, businesses can switch to Imprezz accounting software. Automate GST invoice processing and returns filing to avail benefits and to make life better for oneself and your employees. Stay updated with GST rules and other relaxations, subscribe to Imprezz invoicing software.
We offer a 14 days free trial software program for small businesses in India. Log in to start exporting under GST rules.