Chapter 4: GST and Exports
Under GST law, exports are treated as “zero-rated supplies”. Export of goods and/or services shall always be considered as Zero-rated whether the rate of GST is 0% or 28%. This means that in the case of exports and supplies to Special Economic Zones (SEZ) no tax is charged but a refund of Input Tax Credit is allowed.
By zero-rating, we mean that the entire supply chain of a particular supply is tax-free, i.e., there is no burden of tax either on the input side or output side.
There are 2 options for the export of goods and services under GST:
- You can pay IGST on the supplies and then claim a refund of the tax paid, or
- You can also export without payment of IGST under Bond or Letter of Undertaking.
In this case, you can claim a refund of any unutilized input tax credit. The person engaged in making zero-rated supplies shall be allowed a credit of input tax. It must be noted that even if the supplies made under the zero-rated supplies are exempt i.e. output goods and/or services are exempt, then also such person shall be allowed to avail the credit of input tax.