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There’s no denying that the Goods and Services Tax (GST) has affected every corner of India—businesses are hiring leading tax law firms in Delhi to adjust to their new tax obligations, and regular consumers are learning how it will affect their everyday lives. The GST is a bit more complicated in the context of exports from India, but you should ensure your business has everything in order before you ship anything out of the country.
For small and medium-sized Indian companies doing business abroad, the Goods and Services Tax (GST) is no longer theoretical or in the distant future, so it’s time to get in touch with an expert corporate consultant company to understand how it will affect your business, whether you import goods into India or export them abroad. This blog covers every aspect you need to know about the GST and its impact on your international business activities.
- What is GST, and how does GST apply to exports from India?
When exporting goods or services, many companies need to know about GST. GST is an indirect tax that applies to India’s supply of most products and services, and it was introduced in 2017 by Prime Minister Narendra Modi. It’s imposed on goods and services supplied in the country and applies to imports into India and domestically produced goods.
GST is a destination-based tax that cannot be avoided or evaded by imports into India. It is a comprehensive tax with one single rate of taxation for all goods and services across the country. All businesses supplying any form of product or service in the Indian market have to register under GST, irrespective of their size or turnover. The idea behind this tax is to make it more difficult for black money to be generated through false export invoicing. Due to this, exporters require guidance from a corporate consultant company and clarification regarding the amount of GST paid on exports.
- What are the best practices for exporting under GST?
Under GST, exports are zero-rated with no GST charged on the export of goods. However, if the exporter is registered for GST, then he has to pay Central Goods and Services Tax (CGST) on the input services used in the production of the exported goods. He also has to pay Integrated Goods & Services Tax (IGST) on the sale proceeds of exported goods.
The following lists show what documentation exporters of goods & services must submit to benefit from the tax incentives the government is extending to exports under the GST regime.
- Obtaining the Import-Export Code (IEC)
- If exporting without paying IGST, provide a surety bond or LUT
- Make sure the appropriate purchase orders are attached to the other documents
- Issue tax invoices that include the following information
- Endorsement indicating whether the shipment is for export without or with payment of the integrated tax
- Name, address, & GSTIN of the supplier
- Invoice date and number
- Name and address of the consignee, including delivery address and country of destination
- HSN code (Harmonized System of Nomenclature) of the goods, together with the relevant description
- Quantity of the goods and the total number of units
- The total value of the goods, with breaking down of the value into a price per unit
- Signature of the supplier’s authorized signatory
- File the shipping bill and attach the exact details listed on the tax invoice
- The delivery bill may also serve as a refund claim, provided that:
- The person carrying the good export files an export manifest; and
- The applicant has filed forms GSTR-3 or GSTR-3B.
THE BOTTOM LINE
Understanding what Goods and Services Tax (GST) means and how it will impact your business operations can be challenging, particularly if you need experience with similar laws like the Value Added Tax (VAT). But, thanks to the leading tax law firms in Delhi that help export products from India. These Small Business Advisory Services can assure that the export firm will abide by all relevant laws, including GST.