Export of Goods with Payment of IGST (Apparel)

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This query is : Resolved

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This discussion clarifies why an apparel exporter might charge IGST on export invoices, even when they have a Letter of Undertaking (LUT). The primary reason seems to be related to cash flow, as the exporter pays the IGST upfront and then claims a refund. It's suggested that claiming an IGST refund might be practically easier than an Input Tax Credit (ITC) refund for the exporter in this scenario.

santhosh natarajan

santhosh natarajan (Querist)
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28 February 2024 I have a doubt regarding Export of Goods with Payment of IGST

Assessee is an Exporter of Apparel products.

They are charging IGST in some invoices stating the fund position as reason.

They are receiving payment from buyer after a month from Invoice date and we have to pay IGST while filing GSTR-3B and claim refund of the same.

What is the reason for charging IGST , because we are paying IGST out of our pocket and claiming refund before receiving the payment from the Buyer

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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01 March 2024 In such a case of refund claim, IGST should not be claimed from the buyer.

santhosh natarajan

santhosh natarajan (Querist)
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01 March 2024 I understand that point sir

My query is why are they charging IGST for export even though there is LUT.

Is getting IGST refund(paid by exporter) easier than getting ITC refund, practically?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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01 March 2024 Yes, it may be the reason.

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