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Where does IGST applies for a Proprietor doing export business ?

mack (Thinking-to-start-business) (154 Points)

29 November 2022

Integrated GST applies on Import only or Export only or Import and Export.

So if I am only ‘Exporting’ then on sale “out of country consumption” GST will applies or not ?

If it is applied on only “Purchase happen in india” then I need to only pay (CGST+SGST) not IGST ?

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7 Replies

prasad Nilugal ( GST Practitioner & Accounts ) (14242 Points)
Replied 29 November 2022

Import and export of Goods or services are treated as Inter-state supply as per section 7 of the IGST act, therefore IGST applicable in both the Cases .

prasad Nilugal ( GST Practitioner & Accounts ) (14242 Points)
Replied 29 November 2022

In case of export , its zero rated supply ( No GST) , however you have to export by paying IGST and later claim refund or submit Letter of Undertaking subject to conditions .

3 Like

satish (accuntant) (45 Points)
Replied 29 November 2022

Import & Export of Goods / Service is inter state supply Hence IGST applicable on both sides, where as IGSt on Export if Goods / Service can be claimed as refund other wise you can Export without payment of IGST when you submit letter of undertaking or BANK Guarantee.

1 Like

APURBA CHATTERJEE (QUALIFIED CHARTERED ACCOUNTANT) (602 Points)
Replied 29 November 2022

IGST is applicable for both Import and Export. However, there is an option to export such goods under LUT scheme without payment of IGST.

1 Like

prasad Nilugal ( GST Practitioner & Accounts ) (14242 Points)
Replied 29 November 2022

Bank Guarantee not necessary not written in the IGST Act.

mack (Thinking-to-start-business) (154 Points)
Replied 30 November 2022

Do you want to say that if doing only export after buying raw material or finished products from India you need to pay IGST first and then later you can claim from that IGST refund? I didn’t understood this clearly.

Situation 1 – I purchase a finished product or raw material on “Purchase Price” in India, In this purchase price the seller has already added GST. Now I add my profit margin on top of this ‘Purchase Price’ and then export it without adding GST in the Invoice and then later claim for GST which I paid during the purchase which was part of the purchase.

Situation 2 – I follow the above thing except that while adding my profit margin before export I subtract GST amount from my profit margin to conclude the final export selling price (as that GST I will be getting after claiming)

Situation 3 – I pay GST when I am purchasing (as already added in the purchase price) and then export (sell) the product after adding GST, this would be a higher figure of GST than what I already paid during purchase as now GST is calculated on my selling price which includes my profit margin also and then later claims for the GST which I added on export selling price. So basically when I am claiming on this GST which I added to the export selling price then I would be getting a refund of the complete GST figure (the figure which I gave at the time of purchase which I added in the export selling price with a higher amout of GST based on the final selling price of export).

Please tell me which situation will actually happen in the case of Export ?

mack (Thinking-to-start-business) (154 Points)
Replied 19 December 2022

I think on Import there will be no GST or IGST as GST is imposed by the Indian government for selling so in case of Import goods or services are sold by a person who is either not an Indian and from another country.

Government can impose only custom duty or extra duty to discourage imports but I don't think that logically GST is applied to imports.