Deemed export is a term used to describe a transaction in which goods are supplied to a recipient within the country, but the supply is considered an export under certain circumstances. In other words, deemed exports are those transactions in which goods supplied do not leave the country physically but are treated as exports for taxation. Under the Goods and Services Tax (GST) regime in India, deemed export has a significant impact on the taxation of such transactions.
Scope of Deemed Export under GST
Deemed export covers two types of transactions:
Supply of goods to a person who is located in India, but the goods are intended for export.
Supply of goods to a person who is located in a Special Economic Zone (SEZ).
The following transactions are considered as deemed exports under GST:
Supply of goods by a registered person to an Export Oriented Unit (EOU) or a Special Economic Zone (SEZ) unit. Supply of goods by a registered person to a project authorized by the relevant authority to be an export project. Supply of capital goods to an EOU or SEZ unit for use in manufacturing, processing, or production of goods.
Supply of goods to an EOU or SEZ unit for carrying out authorized operations.
Implications of Deemed Export under GST
Deemed export transactions are eligible for certain benefits and exemptions under the GST regime. Some of the implications of deemed export under GST are as follows:
1. Deemed export transactions are treated as zero-rated supplies under GST, which means that the tax rate is zero.
2. A refund of the tax paid on the inputs used in the deemed export transaction is available.
3. The supplier is not required to pay GST on such supplies, as they are deemed to be exports.
4. The recipient of deemed exports can claim a refund of the GST paid on the supplies received.
Documentation for Deemed Export under GST
To claim benefits under deemed export transactions, certain documents need to be submitted to the GST authorities. The following documents are required for deemed export under GST:
01. A copy of the invoice issued for the supply of goods.
02. A copy of the shipping bill or bill of export.
03. A declaration from the recipient of the goods that the said goods have been received and that the payment for such supplies has been made.
04. Any other document as required by the GST authorities.
Deemed export transactions are an important aspect of international trade, especially for developing countries like India. They provide a boost to the domestic economy by encouraging exports and creating job opportunities. Under GST, the concept of deemed export has been given significant importance, as it has a direct impact on the taxation of such transactions.
As mentioned earlier, deemed export transactions are eligible for certain benefits and exemptions under GST. One such benefit is the refund of the tax paid on the inputs used in the deemed export transaction. This is a significant relief for exporters, as it helps reduce their working capital requirements.
In addition to this, deemed exports are also exempted from the requirement of payment of Integrated Goods and Services Tax (IGST). This means that the supplier is not required to pay IGST on such supplies, as they are deemed to be exports. However, the recipient of deemed exports can claim a refund of the GST paid on the supplies received.
Benefits of Deemed Export TransactionsÂ
To claim benefits under deemed export transactions, certain documents need to be submitted to the GST authorities. These documents include a copy of the invoice issued for the supply of goods, a copy of the shipping bill or bill of export, a declaration from the recipient of the goods that the said goods have been received and that the payment for such supplies has been made, and any other document as required by the GST authorities.
It is important for businesses engaged in deemed export transactions to understand the concept of deemed exports and the documentation required for claiming benefits under the GST regime. This will help them avoid any errors or discrepancies that may result in delays or denials of refunds.
In conclusion
deemed export transactions are an important aspect of international trade and play a crucial role in promoting exports and creating job opportunities. Understanding the concept of deemed exports and the benefits and exemptions available under the GST regime is crucial for businesses engaged in such transactions. It is also important for them to ensure that they comply with the documentation requirements to claim the benefits and avoid any delays or denials of refunds.
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Frequently Ask Question
Q1) What is deemed export under GST?
Deemed export is a term used to describe a transaction in which goods are supplied to a recipient within the country, but the supply is considered an export under certain circumstances. In other words, deemed exports are those transactions in which goods supplied do not leave the country physically but are treated as exports for taxation.
Q2) What are the types of transactions covered under deemed export under GST?
Deemed export covers two types of transactions:
a. Supply of goods to a person who is located in India, but the goods are intended for export.
b. Supply of goods to a person who is located in a Special Economic Zone (SEZ).
Q3) What are the benefits available for deemed export transactions under GST?
Deemed export transactions are eligible for certain benefits and exemptions under GST, including:
a. Zero-rated supplies.
b. Refund of tax paid on inputs used in the deemed export transaction.
c. Exemption from payment of Integrated Goods and Services Tax (IGST).
Q4) Who can claim the refund of the tax paid on inputs used in deemed export transactions under GST?
The supplier of goods can claim the refund of the tax paid on inputs used in deemed export transactions under GST.
Q5) What documents are required for claiming benefits under deemed export transactions under GST?
To claim benefits under deemed export transactions, certain documents need to be submitted to the GST authorities, including a copy of the invoice issued for the supply of goods, a copy of the shipping bill or bill of export, a declaration from the recipient of the goods that the said goods have been received and that the payment for such supplies has been made, and any other document as required by the GST authorities.
Q6) Is it necessary to pay IGST on deemed export transactions under GST?
No, deemed exports are exempted from the requirement of payment of Integrated Goods and Services Tax (IGST). This means that the supplier is not required to pay IGST on such supplies, as they are deemed to be exports. However, the recipient of deemed exports can claim a refund of the GST paid on the supplies received.
Q7) What is the role of deemed export transactions in promoting exports in India?
Deemed export transactions play an important role in promoting exports and creating job opportunities in the country. They provide a boost to the domestic economy by encouraging exports and creating job opportunities.
