We know India is a developing country and to boost its economy it provides its services across the globe. To facilitate this export of services under GST the government has come up with some guidelines and rules which we will discuss in this article.
Export is defined under the IGST ACT in Section 2(6) and lays down the following conditions which need to be satisfied before doing an export.
- The supplier should be located in India
- The recipient of the service should be outside the Indian territory
- The place of supply should lie outside the Indian territory.
- The supplier should receive a foreign convertible exchange for the supply of the services.
- The two persons involved in the export should not belong to the establishments of different persons.
To determine the place of supply we refer to Section 13 of the IGST Act in which a supplier or the recipient is not located in India. In default cases, the place of supply of that service is where a recipient of service is located as GST is a destination-based consumption tax.
Section 13 also includes some special cases like services provided to organizational or artistic events, online database access services, etc.
Under section 7(5) (a) of IGST briefs you about the nature of services. If the supply of service is outside India then it is called interstate supply.
The exports of services can take place in two ways
• Paying IGST at the time of export of service and then ask for a refund.
• Without paying IGST and making an export through Bonds or LUT (Letter of Undertaking) and then claim the Input tax credit.
Export through Bonds
The bonds have to be filled manually with a signature of authorized signatory and a stamp that has to be submitted to Assistant Commissioner along with form RFD-11, bank guarantee, authority letter , etc. The assistant commissioner would verify the documents and will issue acknowledgement letter with his signature for the same.
Letter of Undertaking
To export through letter of undertaking certain conditions have been mentioned by the government that has to be satisfied by the exporters. The online procedure to file the LUT is given below
- Go to the website gst.gov.in.
- Click on services and then select the option of ‘User Services.’
- Select the tab ‘furnish letter for undertaking.’
- Select the financial year for which you want to file LUT.
- Note: If you have already filled the LUT manually. Please upload the same by clicking the ‘choose file’ tab.
- Ensure that the files are uploaded in pdf and jpg format. The size shouldn’t exceed 2 MB.
- A self-declaration form will appear on the next page stating that the exporter has to abide by the GST law, the export of services should take place in three months, and the exporter is liable to pay 18% IGST per year if the exports failed.
- On the next page, the exporter needs to fill his witness’s information like name, address, state, etc.
- Enter the place of filing LUT, the signature of the primary authorized signatory (you) or any authorized signatory working with you, and proceed with any of the two options on the extreme right.
- If you proceed to file with DSC a warning message will appear on the click. By clicking on it you will able to generate ARN (Alternative Reference Number)
- If you file with ESC an OTP will be sent on the authorized signatory’s registered mobile number and email-id. Enter the OTP and proceed. A warning message will appear on the next page and then ARN will generate on the screen.
You can also check your previously submitted LUTs for different tax periods by clicking on tab services. Then click on ‘User Services’ and ‘Submitted LUTs’.
All the export of services is treated as Zero Rated Supply. If your supply is exempted then also you can avail ITC.
Note: If the supply of service is in India and the recipient of the supply is outside India then it is not considered as export. You have to check the nature of the supply of service. If the supply of service in which you are dealing is outside your state then it comes under interstate supply and you have to pay GST. The supply of service will not be treated as Zero Rated Supply as it is not an export.
Process of Refund on the export of services
If the export of services takes place with the tax payment (IGST) then you have to fill the form RFD-01A and satisfy the following conditions.
- The person should be registered under GST Registration and should have GSTIN.
- He should have filled form GSTR-1 and GSTR-3B.
- He should have paid the tax at the time of export of service.
- Go to the website gst.gov.in
- Enter your username and password.
- Click on the tab Services. Then click on Refunds and under it select ‘Application for refunds.’
- Select on the option Export of services with tax payment and click on create.
- Choose the respective financial year and tax periods.
- Select Yes or No if you want a nil refund on the tax periods
IF You Select Yes
- A declaration box will appear. You can select any of the two options on the extreme right
If you file with DSC
Click on the certificate and consequently on the signature button.
If you file with ESC
An OTP will be seen on the registered mobile number and email-id. Enter the OTP and verify.
If you select No
- Download the offline utility and proceed.
- Open statement -3 in excel and fill the recipient’s GSTIN, tax invoice for export of services, etc. Select the tab ‘validate and calculate.’
- A new page will occur with the total number of records. Save the file and upload it.
- Fill the information regarding the export of services and upload the same.
- Now fill the statement 3-A and enter the value of refund to be claimed.
Note: If you have any outstanding demand, verify the same by clicking on the option ‘Go back to Refund Form.’
- Enter the bank account number in which you want the refund. The refund will be automatically credited.
- Upload the supportive documents like GSTR-1, GSTR-3B, GST certificate, etc. in a pdf format up to 5MB in size.
- Click on Declaration and Undertaking statements. Your application for refund is submitted.
Without tax payment
- The procedure is the same as mentioned above. You just need to fill the reference number of the bond or Letter of Undertaking before the last step.
- You can track the status of your application that is valid for 15 days. Go to the Refund section and click on the option ‘My saved application.’