Deemed Exports Transactions Listed Under GST – Can Hurt Many Very Badly

Deemed Exports Transactions Listed Under GST – Can Hurt Many Very Badly

By CA Ankit Gulgulia (Jain)

Vide Notification No. 48/2017–Central Tax dated 18th October, 2017,the CBEC today notified the Supplies which shall qualify as ‘Deemed Exports’ under GST and thereby benefits of Deemed Exports shall Accrue to these Supplies. The Transactions are as under:-

Relevant Notes to the Definition:-

1. “Advance Authorisation” means an authorisation issued by the Director General of Foreign Trade under Chapter 4 of the Foreign Trade Policy 2015-20 for import or domestic procurement of inputs on pre-import basis for physical exports.
2. Export Promotion Capital Goods Authorisation means an authorisation issued by the Director General of Foreign Trade under Chapter 5 of the Foreign Trade Policy 2015-20 for import of capital goods for physical exports.
3. “Export Oriented Unit” means an Export Oriented Unit or Electronic Hardware Technology Park Unit or Software Technology Park Unit or Bio-Technology Park Unit approved in accordance with the provisions of Chapter 6 of the Foreign Trade Policy 2015-20.

Interestingly, despite several other transactions also mentioned in earlier Pre-GST Regime and also current Foreign Trade Policy (2015-20) only four above have been notified.

As per Foreign Trade Policy 2015-2020, followings are treated as deemed exports:

• Supplies against Advance Authorisation/ DFIA
• Supplies to EOU / STP / EHTP / BTP
• Supplies against EPCG authorization
• Supply of marine freight containers
• Supplies to projects against international competitive bidding
• Supplies to projects with zero customs duty
• Supply of goods to mega power projects against International Competitive Bidding
• Supplies to UN Agencies
• Supply of goods to nuclear projects through competitive bidding

As per Section 147 of CGST, 2017

The Government may, on the recommendations of the Council, notify certain supplies of goods as deemed exports, where goods supplied do not leave India, and payment for such supplies is received either in Indian rupees or in convertible foreign exchange, if such goods are manufactured in India.

Clearly, it would be very harsh and burdensome not to cover other transactions with immediate effect also in the definition of Deemed Export to ensure that the Transition is smooth for even the ones left out as it may dent the complete cost structuring of companies who didn’t configured such surprise in their anticipation.

Related Tags CGST