GST Audits: Checks for supply to exporters at concessional rates @0.1%

CA. Heet Shah | Last updated: 15 March 2021

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Quick Summary

Supplies made for export are generally exempt from GST. However, if you're supplying goods to merchant exporters at a concessional rate of 0.1% IGST (or 0.5% CGST/SGST each), specific conditions must be met. These include using a tax invoice, ensuring export within 90 days, and proper documentation on the Bill of Export (BOE) or shipping bill. Auditors must verify that clients maintain correct paperwork and that goods are exported within the stipulated timeframe to avoid potential tax liabilities and interest.

The tax on a supply made for export is exempted vide section 6/9 of CGST/IGST Act, 2017. Accordingly, the supply made for export is exempt in excess of 0.1%, only if certain conditions are fulfilled. Therefore in case if one is supplying to Merchant exported @0.1% (IGST) or 0.5% (CGST & SGST each) following conditions needs to be taken care:

GST Audits: Exporters Concessional Rate Supply 0.1

Supply shall be made under Tax Invoice and the recipient shall export the said goods within 90 Days.
Recipient shall indicate GSTIN & Invoice No. of Supplier on BOE or Shipping bill.
The Recipient shall be registered with EPCG or Commodity board as prescribed by CBIC & shall place an order on procuring goods (P.O) at concessional rate which shall also be forwarded to jurisdictional officer of Supplier.
The goods shall be moved directly to Port/Inland Container deport/Airport/Land Custom Station from where the said goods can be exported. Further if goods will be required to aggregate with other goods same can also be moved registered warehouse which shall be endorsed by the recipient for receipt of such goods along with the acknowledgment from registered warehouse and same shall be forwarded to Supplier & Jurisdictional officer of supplier.
When Goods are exported recipient shall provide the copy of following to Supplier & Jurisdictional officer of supplier:
1. BOE/Shipping bill containing GSTIN & tax invoice of supplier
2. EGM (export general manifest) or Export report

In case the recipient fails to export within 90 days the said exemption stands withdrawn.

Auditors Should provide attention

Therefore being an auditor we need to confirm the same that the proper documentation is maintained by the clients with regards to the same. Also goods has been exported well within time. Otherwise client would be liable for tax along with Interest thereon.