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Exports under GST
Exports under GST
Exports are a vital component of an economy like India which is always on guard relating to its balance of payments. Export result in inflow of much needed foreign capital and thus has to be regularly monitored by the govt. What will be the effect of GST on exports in India? Lets find out
A concept of ‘Zero Rated Supply’ has been introduced under GST for exports. This means exports will be subjected to zero-rate. Or we can also say exporting from India will be tax free in India under the GST regime.
This is done to encourage exports. When more and more people will start exporting, it will result in inflow of greater amount of foreign capital. This is good news since export is beneficial for economic health of any country.
But since export will not attract any tax, how will the exporter utilize his input tax credit?
The govt has plans for that too.
To take the benefit of Input Tax Credit, there are two options available to the exporter –
· He can export under bond or letter of undertaking without paying the IGST and then claim refund of the unutilized ITC. Or,
· He can export by paying the IGST, adjusting his ITC and then claim refund of the taxes so paid. However, such refunds will be subjected to rules, safeguards and procedures as may be prescribed.
Thus GST will simplify export to a large extent with the purpose of encouraging them. It is expected to improve the balance of payment situation in India.
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