Is GST applicable on Exports also? If yes, then how?
In many countries, including India, the Goods and Services Tax (GST) is not applicable on exports. The basic principle is that GST is a consumption-based tax, and exports are considered as “zero-rated” or “taxable at zero percent.” This means that while exports are subject to GST, the rate is set at zero percent, effectively making the transaction tax-free.
Here’s how the GST on exports typically works:
- Zero-rated supply: Export of goods or services is treated as a zero-rated supply under GST. This implies that the exporter does not collect any GST on the export invoice, but they can claim a refund for the GST paid on inputs and input services used in the production or supply of those exported goods or services.
- Export procedure: To ensure that exports are zero-rated, the exporter needs to follow certain procedures and documentation. This may include filing a shipping bill, submitting relevant export documents, and complying with the export documentation requirements.
- Refund mechanism: The exporter can claim a refund of the accumulated Input Tax Credit (ITC) on inputs and input services used in the export. This is usually done through a refund application with the tax authorities.
It’s essential for exporters to comply with the GST rules and procedures to benefit from the zero-rated status. The exact procedures and requirements may vary from country to country, so it’s advisable to consult with a tax professional or refer to the specific GST regulations of the country in question. In the case of India, the rules and procedures related to GST are subject to change, and it’s important to stay updated with the latest regulations from the Goods and Services Tax Network (GSTN) or relevant authorities.