Deemed Exports

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Deemed Exports in GST

Definition:

The term “Deemed exports” refers to the supplies of products outlined in section 147 of the CGST/SGST Act of 2017.

Section 147: The govt may, on the recommendation of the Council, designate as deemed exports certain supplies of products where the goods supplied do not leave India, and payment for such supplies is received in Indian rupees or convertible foreign exchange if the goods are manufactured in India.

“Deemed Exports” refers to shipments of Indian-made goods (and not services). Unlike conventional exports, deemed exports aren’t zero-rated by default. Consequently, all supplies notified as deemed export supplies are going to be subject to taxation, i.e. such supplies can only be made upon payment of tax and can’t be made under a Bond/LUT. The refund of tax paid on a supply considered a Deemed export is however available to either the supplier or the recipient. The supplier or recipient (subject to particular conditions) of deemed export supplies must file the refund claim, counting on the circumstances.

Notice No. 48/2017 Central Tax - Deemed Exports:

In accordance with the authority granted under “Section 147” of the “CGST Act”, issued by the Central Government has “Notification No. 48/2017-Central Tax” dated October 18, 2017 declaring the subsequent categories of goods as Deemed Exports:

Sl No	Description of Supply
1	Supply of goods by a registered person against Advance Authorization issued by the Director General of Foreign Trade for import or domestic procurement of inputs on pre-import basis for physical exports.
2	Supply of capital goods by a registered person against Export Promotion Capital Goods Authorization issued by the Director General of Foreign Trade for for import of capital goods for physical exports.
3	Supply of goods by a registered person to Export Oriented Unit (EOU) or Electronic Hardware Technology Unit (EHTPU) or Software Technology Park Unit (STPI) or Biotechnology Park Unit (BTP).
4	Supply of gold by a bank or Public Sector Undertaking specified in the notification No. 50/2017-Customs, dated the 30th June, 2017 (as amended) against Advance Authorization.

Deduction for Deemed Exports:

The applicant for a refund in cases of presumed exports can also be the recipient of the presumed export supplies. Alternately, the supplier of such deemed export supplies may file the refund application if the recipient doesn’t claim the input tax credit on such supplies and provides an undertaking to that effect.

In cases where the supplier has availed himself of the provisions of notification No. 48/2017-Central Tax dated October 18, 2017, the recipient of deemed export supplies may claim a refund of input decrease availed in respect of other inputs or input services used in making zero-rated supplies of goods or services or both.

The receiver of deemed export supplies on which the supplier has taken advantage of notification No. 48/2017-Central Tax dated October 18, 2017, might not export upon payment of integrated tax.

To obtain a refund, the recipient or supplier of deemed export supplies must submit an application in FORM GST RFD-01 through the Common Portal, either directly or through a Facilitation Centre notified by the Commissioner, within two years of the date on which the return referring to such deemed export supplies must be furnished electronically.

Deemed Exports Procedure:

the subsequent procedure must be followed for deemed export supplies to EOU/EHTP/STP/BTP units that have been notified:

The recipient EOU / EHTP / STP / BTP unit is required to supply prior notice in Form-A to the registered supplier, the jurisdictional GST officer responsible of such registered supplier, and its own jurisdictional GST officer.
The registered supplier will then ship goods to the EOU / EHTP / STP / BTP unit employing a tax invoice.
Upon receiving such supplies, the EOU / EHTP / STP / BTP unit must endorse the tax invoice and send a replica to the registered supplier, the jurisdictional GST officer responsible of the registered supplier, and therefore the registered supplier's jurisdictional GST officer.

The endorsed tax invoice is going to be considered evidence of the registered person’s presumed export supplies to the EOU / EHTP / STP / BTP unit.

The recipient of the EOU / EHTP / STP / BTP unit is required to take care of digital records of these presumed exports based on the data elements contained in Form-B.

Form A:

The recipient EOU / EHTP / STP / BTP unit shall provide the registered supplier, the jurisdictional GST officer responsible of such registered supplier, and its jurisdictional GST officer with the subsequent Form A.

Form B:

The shape B format is outlined below. The EOU / EHTP / STP / BTP is required to supply a digital copy of Form-B to the Jurisdictional GST Officer on a monthly basis (i.e. by the 10th of the subsequent month for the previous month’s details) on a CD or Pen Drive etc.

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