Traders, small businessmen, manufacturers and suppliers are studying various tax implications after the much-awaited launch of GST or goods and services tax on July 1, 2017.
Many exporters expect GST to boost competitiveness in the outward shipments with reduction in transaction cost in the long run. The Central Board of Excise Customs or CBEC has come out with few guidelines in a bid to simplify indirect tax implications under the new system.
Quoting of GSTIN or Goods And Services Tax Identification Number in the shipping bill is mandatory, if the export product attracts GST for domestic clearance.
Here are some other things mentioned by the CBEC:
GSTIN/PAN and invoice information in shipping bill.
Quoting of PAN, which is authorised as an import export code or IEC by the Directorate General of Foreign Trade (DGFT), would suffice if the exporter exclusively deals with products which are either wholly exempt from GST or out of GST regime.
In case of exports by specialised agencies such as United Nationals Organization or notified Multilateral Financial Institutions, Embassies and Consulates, the exporter can quote Unique Identity Number, instead of GSTIN, in the shipping bill.
Without GSTIN or PAN or UIN, the shipping bill cannot be filed.
The claim for refund of IGST paid or input tax credit on inputs consumed in goods exported cannot be processed without GSTIN and GST Invoice details in shipping bill. Commercial invoice information should be provided in the shipping bill. Wherever commercial invoice is different from tax invoice, details of both have to be provided in the shipping bill. Taxable value and tax amount should be mentioned against each item in the shipping bill for processing the refund amount. Multiple tax invoices issued by a GSTIN holder are allowed in one shipping bill for the same consignee.
State code is part of the GSTIN numbering scheme. However, in the shipping bill for the field 'state of origin', declare the state code from where export goods originated as it was being done before.
Bond or Letter of Undertaking along with shipping bill
As per rule 96A of the Central Goods and Services Tax Rules, 2017, any registered person exporting goods without payment of integrated tax is required to furnish a bond or a letter of undertaking (LUT) in Form GST RFD-11.
The following registered person shall be eligible for submission of Letter of Undertaking in place of a bond:
(a) a status holder as specified in the Foreign Trade Policy 2015-2020; or
(b) who has received the due foreign inward remittances amounting to a minimum of 10 per cent of the export turnover, which should not be less than one crore rupees, in the preceding financial year, and he has not been prosecuted for any offence under the Central Goods and Services Tax Act, 2017 (12 of 2017) or under any of the existing laws in case where the amount of tax evaded exceeds two hundred and fifty lakh rupees.
The bond shall be furnished on a non-judicial stamp paper of the value as applicable in the state in which the bond is being furnished.
The exporters shall furnish a running bond, in case he is required to furnish a bond, in Form GST RFD-11. The bond would cover the amount of tax involved in the export based on estimated tax liability as assessed by the exporter himself.
Based on the track record of exporter, a bank guarantee required to be submitted along with the bond may be waived off by the jurisdictional GST Commissioner. The bank guarantee should normally not exceed 15 per cent of the bond amount.
Form RFD -11 under GST
The RFD 11 form is used for creating Export Invoice in relation to GST Sales. RFD 11 is an Invoice generally created by Merchant Exporters. This format is for furnishing Bond of Undertaking for export of goods and services. However, along with RFD 11 form, a hard copy of the bank guarantee shall be furnished to the jurisdictional officer.
Provision relating to GST RFD 11 Form
96A. Refund of integrated tax paid on export of goods or services under bond or Letter of Undertaking.- (1) Any registered person availing the option to supply of goods or services for export without payment of integrated tax shall furnish, prior to export, a bond or a Letter of Undertaking in FORM GST RFD-11 to the jurisdictional Commissioner, binding himself to pay the tax due along with the interest specified under sub-section (1) of section 50 within a period of
- fifteen days after the expiry of three months from the date of issue of the invoice for export, if the goods are not exported out of India; or
- fifteen days after the expiry of one year, or such further period as may be allowed by the Commissioner, from the date of issue of the invoice for export, if the payment of such services is not received by the exporter in convertible foreign exchange.