December 17, 2021

Indian government has initiated to increase the exports from India as portrayed by the “Make in India” policy, and the many tax benefits provided to the exporters. GST rolled out on July 1 and yet there is still some ambiguity among the exporters on the possible impact of the new regime on this industry.

On 28th June 2017, the Indian government has given a set of notifications and guidance notes to solve the confusions that may arise on applicability of GST and cess rates.

Meaning of Export of Goods and Services

  • Export of Goods as defined under section 2(5)  of IGST Act, 2017 means the supply of goods means – with its grammatical variations and cognate expressions, means taking goods out of India to a place outside India;

  • Export of Services as defined under Section 2 (6) of IGST Act, 2017 means the supply of any service, when –

  1. the supplier of service is located in India;

  2. the recipient of service is located outside India;

  3. the place of supply of service is outside India;

  4. the payment for such service has been received by the supplier of service in convertible foreign exchange; and

  5. the supplier of service and the recipient of service are not merely establishments of a distinct person in accordance with Explanation 1 in section 8.

How are Exports treated under the GST Law

Under the GST Law, export of goods and services has been treated as:

  • inter-State supply and covered under the IGST Act;

  • ‘zero rated supply’ i.e. the goods or services exported shall be relieved of GST levied upon them either at the input stage or at the final product stage.

GST on Exports: How Will It Be Levied

A duty drawback was provided under the previous laws for the tax paid on inputs for the export of exempted goods. Claiming the duty drawback was a cumbersome process. Under GST, the duty drawback would only be available for the customs duty paid on imported inputs or central excise paid on certain petroleum or tobacco products used as inputs or fuel for captive power generation. There was some confusion surrounding the refund of the tax paid by exporters on the inputs.

And here there are two options for an assessee dealt with Export of Goods and Services. They are:

  • Option 1: 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 then claim a refund of unutilised input tax credit.

  • Option 2: Any exporter or United Nations or Embassy or other agencies/bodies as specified in section 55 who supplies goods or services, or both, after fulfilling certain conditions, safeguards and procedures as may be prescribed; and paying the IGST, can claim refund of such tax paid on the supplied goods or services, or both. The applicant has to apply for the refund as per the conditions specified under section 54 of the CGST Act.


With GST in place, the export industry in India would be able to have internationally competitive prices due to the smooth process of claiming input tax credit and the availability of input tax credit on services.

So, those were the provisions related to export of goods & services under GST.  Please contact us if you have any queries.

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