Difference Between Deemed Export and Exports?

Export of goods, in common parlance, means taking goods outside India. Such supplies are treated as zero-rated supplies under GST. However, the Central Government may notify certain categories of supplies of goods, which would be treated as deemed exports.

This means that such supplies shall be treated as exports even if such goods are not taken outside India.

Notification No. 48/2017 – Central Tax dated 18 October 2017 has notified the following supply of goods as deemed exports:

1.Supply of goods by the registered person against Advance Authorisation (AA) and Export Promotion Capital Goods Authorisation (EPCG)
2.Supply of goods by the registered person to Export Oriented Unit (EOU)/ Electronic Hardware Technology Park Unit (EHTP) / Software Technology Park Unit (STP) / Bio-Technology Park Unit (BTP)
3.Supply of gold by Bank or Public Sector Undertaking against AA

For example, Dealer ‘A’ (located in Rajasthan) sells goods to Dealer ‘B’ which is an EOU. B, in turn, sells the goods to a customer ‘C’ in Germany.

Supply by A to B is treated as deemed exports. Supply by B to C is treated as exports.

Unlike exports, Deemed export supplies are not zero-rated supplies by default. All deemed export supplies will be subject to GST at the point of supply. Supplies cannot be made under Bond / LUT without payment of tax. Tax should be paid on such supply and then be claimed as refund.