The Foreign Trade Policy defines ‘Deemed Exports' as goods (not services) made in India that are moved locally and do not leave the country. Deemed export simply indicates that the provider can be paid in either Indian Rupees or convertible foreign currency for this transaction.
“Deemed exports" for the purpose of GST would include only the supplies notified under section 147 of the CGST/SGST Act, on the recommendations of the GST council. the benefits of GST and conditions applicable for such benefits would be as specified by the GST council and as per relevant rules and notification.
The following are the FTP conditions that must be met for any transaction to be considered a "deemed export."
The Central Government has issued Notification No. 48/2017-Central Tax dated 18.10.2017 in exercise of powers provided under Section 147 of the CGST Act, declaring the following categories of commodities supply as Deemed Exports: –
01. Goods supplied by a registered person under the terms of an Advance Authorization i.e., the supplier must be GST-registered, and the recipient must have an Advance Authorization.
02. Capital goods supplied by a registered person in accordance with an Export Promotion Capital Goods Authorisation.
03. Goods supplied to an Export Oriented Unit (EOU) / STP / EHTP /BTP by a registered person (BTP)
04. Supply of gold by a bank or a public sector undertaking pursuant to an Advance Authorization as defined in Notification No. 50/2017-Customs dated June 30, 2017 (as amended)
Supplies that are deemed export supplies are not zero-rated. At the point of sale, all presumed export supplies will be liable to GST. Tax cannot be paid on supplies made under Bond / LUT. Tax should be paid on such a supply, and then a refund obtained.
Refund of tax paid can be sought by either of the following individuals, subject to specific conditions:
1. Goods provider OR
2. A person who receives goods.
Note that if the supplier is claiming a refund of tax paid, the recipient is not able to claim the input tax credit (ITC).
1. The EOU/ EHTP/ STP/ BTP unit must notify the supplier and the jurisdictional GST officer of the supplier and the recipient as a recipient by filing Form A (attached hereto).
2. Form A must have a running serial number and contain details of the goods to be procured, which the Development Commissioner has pre-approved.
3. The supplier must then deliver goods accompanied by a tax invoice.
4. The recipient must sign the tax invoice. The supplier, as well as the jurisdictional GST officer of the supplier and the recipient as a recipient, shall receive an endorsed copy of the same.
5. Form B must be used to keep track of the goods received by the EOU/ EHTP/ STP/ BTP unit (Appended herewith).
To get a refund, you'll need the following documentation:
The following information/documents must be provided if the supplier is demanding a refund of tax paid on considered exports:
The following benefits are available to commodities that are eligible to be considered deemed exports:
Supplies will be eligible for deemed export drawback as per para 7.03(b) of FTP as under:
Refund of drawback on the inputs used in manufacture and supply under the said category can be claimed on ‘All Industry Rate’ of Duty Drawback Schedule notified by Department of Revenue from time to time provided no CENVAT credit has been availed by supplier of goods on excisable inputs or on ‘Brand Rate Basis’ upon submission of documents evidencing actual payment of basic custom duties.
At Enrich Professional Services, we give you a detailed explanation of the terms and conditions of the benefits of Deemed exports and will help you in applying the benefits of Deemed exports from DGFT.