Purchase tax for export

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vijaya Prabha Suresh (Querist)
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01 March 2014 We are exporting gold. We aré buying gold from nominated agencies from scotia bank. Under EXIM policy hey have not charged any sales tax on condition we should export the gold within 3 months . We transfer the goods to Kerala Kochin Sez unit (our branch ) and export . whether Purchase tax is to be collected for this.

vijaya Prabha Suresh

vijaya Prabha Suresh (Querist)
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01 March 2014 Can yo clarify this doubt?

vijaya Prabha Suresh

vijaya Prabha Suresh (Querist)
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11 March 2014 Can you please clarify this doubt

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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10 August 2024 When dealing with the export of gold and related transactions, it's essential to understand the nuances of purchase tax and other tax implications. Here's a detailed explanation relevant to your situation:

### **1. Purchase Tax on Goods for Export**

**a. **General Rule:**

1. **Export Sales Exemption:**
- In India, goods sold for export are generally exempt from sales tax/VAT. This means that goods purchased for export are not subject to purchase tax if they are exported as per the applicable rules.

2. **No Purchase Tax:**
- If you are buying gold from a nominated agency, and if the sale is intended for export, then generally, no purchase tax should be applicable. This is because export sales are typically exempt from local sales taxes, and the tax is not levied on export sales directly.

**b. **Specifics for Your Case:**

1. **Gold from Nominated Agencies:**
- Since you are buying gold from a nominated agency (e.g., Scotia Bank) under the EXIM policy, and the agency has not charged any sales tax with the condition that the gold must be exported within 3 months, this aligns with the general exemption principle.

2. **Transfer to SEZ Unit:**
- When you transfer the gold to your SEZ (Special Economic Zone) unit in Kochi, it is considered as a part of the export process. SEZ units operate under special tax rules, and generally, the transfer of goods to an SEZ unit is not subject to purchase tax.

3. **Export within 3 Months:**
- Ensure that the gold is exported within the stipulated 3 months to comply with the conditions provided by the agency. Compliance with the export requirement helps in maintaining the exemption status and avoiding any tax liabilities.

### **2. Documentation and Compliance**

**a. **Maintaining Records:**

1. **Proof of Export:**
- Keep detailed records of the purchase, transfer to the SEZ, and export documentation. This includes invoices, shipping bills, export documents, and proof of transfer to the SEZ.

2. **Compliance with EXIM Policy:**
- Ensure adherence to the EXIM policy guidelines and conditions, including the requirement for exporting within 3 months.

**b. **Filing and Reporting:**

1. **VAT Returns:**
- While you may not need to show purchase tax in your VAT returns, you should accurately reflect the transactions in your books of accounts and report the export transactions as per regulatory requirements.

2. **SEZ Regulations:**
- Comply with SEZ regulations for the transfer and export of goods. SEZ units have specific procedures and documentation requirements.

### **3. Summary**

- **Purchase Tax:** No purchase tax is typically applicable on goods purchased for export, provided the conditions of the EXIM policy are met.
- **Export Compliance:** Ensure compliance with the EXIM policy and export within the stipulated time frame.
- **SEZ Transfers:** Transfers to SEZ units are generally not subject to local purchase tax.

It’s crucial to consult with a tax professional or a consultant specializing in export and SEZ regulations to ensure compliance with all applicable rules and regulations. They can provide tailored advice based on the latest legal framework and specific details of your transactions.

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