Igst
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
29 June 2017
Dear all,
Pls suggest me that is there compulsory to pay IGST on purchase of Goods for Export Purpose or if No.
Then is there any Declaration or Bond or Undertaking as per ''Section 16 of IGST – Zero rated supply'' that can we provide to not give IGST.
Pls answer
Rohit
Pls suggest me that is there compulsory to pay IGST on purchase of Goods for Export Purpose or if No.
Then is there any Declaration or Bond or Undertaking as per ''Section 16 of IGST – Zero rated supply'' that can we provide to not give IGST.
Pls answer
Rohit
29 June 2017
You have to pay IGST.
No such declaration in GST
Querist : Anonymous
Querist :
Anonymous
(Querist)
30 June 2017
Dear Mam,
Pls clear below section 16(3)(a)
what does it mean about
he may supply goods or services or both under bond or Letter of Undertaking,
subject to such conditions, safeguards and procedure as may be prescribed, without
payment of integrated tax and claim refund of unutilised input tax credit; or
The extract of Section 16 of IGST Act,2017 quoted below:
16 Zero rated supply.
16. (1) “zero rated supply” means any of the following supplies of goods or services
or both, namely:––
(a) export of goods or services or both; or
Zero rated supply, section 16 of IGST Act,2017(b) supply of goods or services or both to a Special Economic Zone developer
or a Special Economic Zone unit.
(2) Subject to the provisions of sub-section (5) of section 17 of the Central Goods
and Services Tax Act, credit of input tax may be availed for making zero-rated supplies,
notwithstanding that such supply may be an exempt supply.
(3) A registered person making zero rated supply shall be eligible to claim refund
under either of the following options, namely:––
(a) he may supply goods or services or both under bond or Letter of Undertaking,
subject to such conditions, safeguards and procedure as may be prescribed, without
payment of integrated tax and claim refund of unutilised input tax credit; or
(b) he may supply goods or services or both, subject to such conditions,
safeguards and procedure as may be prescribed, on payment of integrated tax and
claim refund of such tax paid on goods or services or both supplied,
in accordance with the provisions of section 54 of the Central Goods and Services Tax Act
or the rules made thereunder.
Pls clear below section 16(3)(a)
what does it mean about
he may supply goods or services or both under bond or Letter of Undertaking,
subject to such conditions, safeguards and procedure as may be prescribed, without
payment of integrated tax and claim refund of unutilised input tax credit; or
The extract of Section 16 of IGST Act,2017 quoted below:
16 Zero rated supply.
16. (1) “zero rated supply” means any of the following supplies of goods or services
or both, namely:––
(a) export of goods or services or both; or
Zero rated supply, section 16 of IGST Act,2017(b) supply of goods or services or both to a Special Economic Zone developer
or a Special Economic Zone unit.
(2) Subject to the provisions of sub-section (5) of section 17 of the Central Goods
and Services Tax Act, credit of input tax may be availed for making zero-rated supplies,
notwithstanding that such supply may be an exempt supply.
(3) A registered person making zero rated supply shall be eligible to claim refund
under either of the following options, namely:––
(a) he may supply goods or services or both under bond or Letter of Undertaking,
subject to such conditions, safeguards and procedure as may be prescribed, without
payment of integrated tax and claim refund of unutilised input tax credit; or
(b) he may supply goods or services or both, subject to such conditions,
safeguards and procedure as may be prescribed, on payment of integrated tax and
claim refund of such tax paid on goods or services or both supplied,
in accordance with the provisions of section 54 of the Central Goods and Services Tax Act
or the rules made thereunder.
28 July 2024
### **Understanding IGST on Export Goods and Section 16 of IGST Act, 2017**
**1. **Compulsory Payment of IGST on Export of Goods**
- **IGST on Exports:** Exports of goods are considered "zero-rated supplies" under the IGST Act, 2017. This means that while the supply of goods for export is zero-rated, it does not imply that no tax is applicable. Instead, it means that the export supply is taxed at a rate of 0%.
- **Payment of IGST:** For zero-rated supplies, you can either make the supply:
- **Without Payment of IGST:** Under a bond or Letter of Undertaking (LoU), or
- **With Payment of IGST:** You pay the IGST on the export goods and then claim a refund for the IGST paid.
**2. **Declaration or Bond or Undertaking**
Under Section 16(3) of the IGST Act, 2017, you have two options for exporting goods:
**Option 1: Supply Without Payment of IGST**
- **Provision:** You may supply goods or services under a bond or Letter of Undertaking (LoU) without payment of integrated tax (IGST) and then claim a refund of unutilized input tax credit (ITC).
- **Conditions and Procedure:** This option is subject to certain conditions, safeguards, and procedures prescribed by the GST rules. Generally, this involves furnishing a bond or LoU with a bank guarantee (if required) to the proper officer and complying with procedural requirements.
**Option 2: Supply With Payment of IGST**
- **Provision:** Alternatively, you may supply goods or services on payment of IGST and then claim a refund of the tax paid.
- **Claiming Refund:** This refund is processed in accordance with Section 54 of the CGST Act, which governs the refund of taxes.
### **Detailed Explanation of Section 16(3)(a)**
**Section 16(3)(a):**
- **Provision:** "He may supply goods or services or both under bond or Letter of Undertaking, subject to such conditions, safeguards and procedure as may be prescribed, without payment of integrated tax and claim refund of unutilised input tax credit."
**Meaning:**
- **Without Payment of IGST:** You can export goods or services without paying IGST upfront if you opt to execute a bond or LoU.
- **Bond or LoU:** This bond or LoU serves as a guarantee that you will comply with the conditions set by the GST authorities and that you will properly account for the export of goods or services.
- **Claim Refund of ITC:** After making a zero-rated supply under this method, you can claim a refund of the input tax credit (ITC) that was unutilized, which is related to the exported goods or services.
**Conditions and Safeguards:**
- **Prescribed Rules:** The specific conditions, safeguards, and procedural requirements for availing of this option are prescribed in the GST rules. These rules may include requirements such as submission of the bond or LoU with a bank guarantee, periodic filing of export returns, and compliance with export documentation and procedures.
### **Action Points for Exporters**
1. **Decide on the Option:**
- **Option 1 (Without Payment of IGST):** If you prefer to avoid paying IGST upfront, opt for this method and ensure compliance with the bond/LoU requirements.
- **Option 2 (With Payment of IGST):** If you choose to pay IGST on export supplies, ensure that you follow the procedure for claiming a refund of the IGST paid.
2. **Familiarize with Rules:**
- Review the relevant GST rules and guidelines regarding the execution of bonds or LoUs and the process for claiming refunds.
3. **Consult with Authorities:**
- If you have specific queries or need clarification on the procedural requirements, consult with the GST authorities or a tax advisor.
4. **Document Compliance:**
- Ensure that all export documentation, compliance with conditions, and procedural requirements are thoroughly documented and adhered to.
By following the above steps, you can manage the IGST on export supplies effectively and ensure compliance with the provisions of the IGST Act, 2017.
**1. **Compulsory Payment of IGST on Export of Goods**
- **IGST on Exports:** Exports of goods are considered "zero-rated supplies" under the IGST Act, 2017. This means that while the supply of goods for export is zero-rated, it does not imply that no tax is applicable. Instead, it means that the export supply is taxed at a rate of 0%.
- **Payment of IGST:** For zero-rated supplies, you can either make the supply:
- **Without Payment of IGST:** Under a bond or Letter of Undertaking (LoU), or
- **With Payment of IGST:** You pay the IGST on the export goods and then claim a refund for the IGST paid.
**2. **Declaration or Bond or Undertaking**
Under Section 16(3) of the IGST Act, 2017, you have two options for exporting goods:
**Option 1: Supply Without Payment of IGST**
- **Provision:** You may supply goods or services under a bond or Letter of Undertaking (LoU) without payment of integrated tax (IGST) and then claim a refund of unutilized input tax credit (ITC).
- **Conditions and Procedure:** This option is subject to certain conditions, safeguards, and procedures prescribed by the GST rules. Generally, this involves furnishing a bond or LoU with a bank guarantee (if required) to the proper officer and complying with procedural requirements.
**Option 2: Supply With Payment of IGST**
- **Provision:** Alternatively, you may supply goods or services on payment of IGST and then claim a refund of the tax paid.
- **Claiming Refund:** This refund is processed in accordance with Section 54 of the CGST Act, which governs the refund of taxes.
### **Detailed Explanation of Section 16(3)(a)**
**Section 16(3)(a):**
- **Provision:** "He may supply goods or services or both under bond or Letter of Undertaking, subject to such conditions, safeguards and procedure as may be prescribed, without payment of integrated tax and claim refund of unutilised input tax credit."
**Meaning:**
- **Without Payment of IGST:** You can export goods or services without paying IGST upfront if you opt to execute a bond or LoU.
- **Bond or LoU:** This bond or LoU serves as a guarantee that you will comply with the conditions set by the GST authorities and that you will properly account for the export of goods or services.
- **Claim Refund of ITC:** After making a zero-rated supply under this method, you can claim a refund of the input tax credit (ITC) that was unutilized, which is related to the exported goods or services.
**Conditions and Safeguards:**
- **Prescribed Rules:** The specific conditions, safeguards, and procedural requirements for availing of this option are prescribed in the GST rules. These rules may include requirements such as submission of the bond or LoU with a bank guarantee, periodic filing of export returns, and compliance with export documentation and procedures.
### **Action Points for Exporters**
1. **Decide on the Option:**
- **Option 1 (Without Payment of IGST):** If you prefer to avoid paying IGST upfront, opt for this method and ensure compliance with the bond/LoU requirements.
- **Option 2 (With Payment of IGST):** If you choose to pay IGST on export supplies, ensure that you follow the procedure for claiming a refund of the IGST paid.
2. **Familiarize with Rules:**
- Review the relevant GST rules and guidelines regarding the execution of bonds or LoUs and the process for claiming refunds.
3. **Consult with Authorities:**
- If you have specific queries or need clarification on the procedural requirements, consult with the GST authorities or a tax advisor.
4. **Document Compliance:**
- Ensure that all export documentation, compliance with conditions, and procedural requirements are thoroughly documented and adhered to.
By following the above steps, you can manage the IGST on export supplies effectively and ensure compliance with the provisions of the IGST Act, 2017.
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