Building an e-commerce export business from India has been made relatively easier with the introduction of Amazon Global Selling and importer of record. It is a program backed by Amazon that reaches over 18 global Amazon marketplaces in countries like the US, UK, Australia etc. An exporter can increase international sales by tapping over 300 million Amazon consumers worldwide. With easy listing and hassle-free process, Amazon Global Selling offers a wide variety of solutions and tools to Indian exporters, making it easy to build an e-commerce export business.
The introduction of goods and services tax (GST) has been one of the most critical changes in the indirect taxation regime in India. It is important to understand the implication of GST on exports before one starts shipping goods from India to the rest of the world.
GST expects goods to be at zero rates supply in case of exports. In other words, the exporters can claim a refund on the GST paid on the input costs for manufacturing products meant for exports. As exports are considered inter-state supplies, the exporter has the option to claim a refund on the GST paid on the input costs by opting for one of the two following routes:
· Pay Integrated Goods and Services Tax (IGST) by using the input tax credit (ITC) and claim a refund on the IGST paid.
· Export using the bond or Letter of Undertaking (LUT) route without paying tax and claim an ITC refund.
What is Integrated Goods and Services Tax (IGST)?
Integrated Goods and Services Tax (IGST) is arrived at by adding central and state GST. The central government charges it as it helps to maintain uniformity in taxation in case of inter-state supplies. At the same time, it helps maintain the integrity of the ITC in case of inter-state supplies.
What is Input Tax Credit (ITC)?
Input Tax Credit is the excess tax paid on the cost of the inputs as compared to the tax charged on the output (products being exported). The GST framework allows a business to claim a refund of unutilized ITC as it is considered a zero-rated supply.
What documents are required to claim ITC on goods exported under GST?
An exporter can claim an ITC refund by filling up form GSTR-2. The documents required for claiming a refund of ITC under GST on export are as follows:
· Supplier’s invoice for goods as per the GST Section 31 provisions
· Debit Note from the supplier
· Bill of entry
· Document from the input service distributor as per GST provisions
GST refund on export under LUT
A letter of Undertaking, also known as LUT, comes from an exporter with which you can export goods without making payment of IGST. Some conditions are expected to be satisfied under LUT to claim the benefits. According to the 37/2017-Central Tax notification, an exporter must file LUT for exporting goods and services. However, if the exporter does not have a LUT in place, IGST needs to be paid.
Filing a Letter of Undertaking (LUT)
According to the Central Goods and Service Act 2017 provisions, an exporter must submit a LUT in case of the export of goods. Once issued, the LUT is valid for that particular financial year, allowing the exporter to claim refunds on the GST paid. Once the LUT has been issued to the exporter, since it is valid for the remaining months in a financial year, an exporter is not required to go through the formalities each time a shipment has to go out. The export can simply fill in the details on the GST Portal to claim a refund on the goods exported.
Claiming an IGST refund
If ITC is used to pay IGST, an exporter can claim the refund on the tax paid. The exporter needs to furnish the shipping bill in this case. As an exporter fills up FORM GSTR-3 on the GST portal and the customs receive it, they can process the refund on the transaction. The amount of IGST paid on the shipping bill is transferred directly to the exporter’s bank account.
To reduce the effort required in the entire process, the government has ensured that the process of furnishing and filing documents can be done online. In the era of e-commerce exports, the eased processes greatly help Indian exporters who are willing to explore international markets for their products.
Opt for e-commerce exports with Amazon
Building an e-commerce export business from India has been made relatively easier with the introduction of Amazon Global Selling. It is a program backed by Amazon that reaches over 18 global Amazon marketplaces in countries like the US, UK, Australia etc. An exporter can increase international sales by tapping over 300 million Amazon consumers worldwide. With easy listing and hassle-free process, Amazon Global Selling offers a wide variety of solutions and tools to Indian exporters, making it easy to build an e-commerce export business.
Read more – https://viestories.com/stories/e-commerce/
FAQs
What are deemed exports?
Deemed exports are a case of goods where the goods supplied do not move out of the country.
What is export duty?
Export duty is the tax rate imposed on the products meant for export.
How does GST change with a change in currency?
The tax value of the exported goods will be multiplied by the buying and selling rates of the particular currency, taking into account the RBI reference rates. In case RBI reference rates are not available for a particular currency, The tax value will equal the gross amount received in INR after currency conversion.
