Documents and procedures for exporters under GST

Exports have been a highlight of the Indian economy not only for generating additional revenue for domestic manufacturers, but also for the fact that foreign exchange adds indispensable fuel to Indian economic growth. Recognizing these benefits, the Goods and Services Tax (GST) regime has extended the benefit of zero-rated supplies to exports; in other words, they’ve set the GST rate for exports to 0%.

In order to export goods or services and properly claim this benefit, businesses have a couple of options:

• They may furnish a bond or Letter of Undertaking (LUT) without paying IGST fees. (Note: a LUT is valid only for one financial year. Exporters must apply for fresh LUTs yearly); or,
• They may include payment for IGST and later claim a refund for the same

In addition, exporters are required to follow certain procedures and maintain certain documents depending on which method they choose from above and whether the product exported is a good or service.

The following lists outline the robust trails of documentation exporters of goods and services must maintain in order to benefit from the tax incentives extended to exports by the government under the aegis of the GST regime.

Exporting goods: documents and procedures

1. Obtain the Import Export Code (IEC);
2. If exporting without paying IGST, furnish a bond or LUT;
3. Ensure relevant purchase orders are attached to other documents;
4. Issue tax invoices containing the following details:
   1. Endorsement describing whether the supply is for export with or without payment of integrated tax
   2. Name, address, and GSTIN of the supplier
   3. Invoice number and date
   4. Name and address of the recipient, including delivery address and destination country
   5. Harmonized System of Nomenclature (HSN) Code of goods, along with the relevant description
   6. Quantity of the goods and the number of units
   7. The total value of the goods, with the breakdown of the value into the price per unit
   8. Signature of the authorised signatory of the supplier;
5. File the shipping bill and include the same details listed on the tax invoice.
   1. The shipping bill can also act as a refund claim provided that:
      1. The person carrying the export good files an export manifest; and
      2. Applicant has filed forms GSTR-3 or GSTR-3B appropriately.

Exporting services: documents and procedures

As per Section 2(6) of the 2017 IGST Act, services qualify as exports when:

• Suppliers of services are in India
• Recipients of services are situated outside India
• The place of supply (POS) of services is outside India. For cross-border transactions, unless specifically mentioned, the default POS for services is the location of the recipient of service;
• Suppliers of such services have received payment for such services in convertible foreign exchange; and
• Suppliers of services and the recipients of services are not merely establishments of a distinct person.

1. If exports are made without payment of IGST, furnish a bond or LUT
2. Ensure that the relevant service agreement is attached to other documents;
3. Issue a tax invoice containing the following details:
   1. Endorsement describing whether the supply is meant for export with or without payment of integrated tax;
   2. Name, address, and GSTIN of the supplier;
   3. Invoice number and date;
   4. Name and address of the recipient;
   5. HSN Code of services along with a relevant description;
   6. The total value of services with stage-wise breakdown, if any; and
   7. Signature of the authorised signatory of the supplier
4. To avoid incurring GST charges, maintain documents such as the Foreign Inward Remittance Certificate or Bank Realisation Certificate to act as a proof of receipt of convertible foreign exchange within the prescribed period (typically one year from the date of export). GST will be made applicable to transactions in which exporters do not take this step.

Avalara is a leader in global compliance solutions and indirect tax automation worldwide. As an experienced application service provider (ASP), we prepare businesses for growth in the global market and we are a partner of authorized GST Suvidha Providers (GSPs). To learn more about how our cloud-based application,  Avalara India GST, can help you with GST compliance automation, contact us through https://www.avalara.com/in/products/gst-returns-filing