GST Refund for Exporters - Duty Drawback Scheme

As per the GST framework, the GST acts as a consumption based tax and hence, the end customer becomes liable for the payment of Goods and Services Tax. In the case of exports, the end consumer of the goods or services would be not in India and GST would not be applicable. Thus, under the

GST regime, exports would be considered as zero-rated supply and exporters are eligible to claim a refund of GST paid. In this article, we look at the GST refund on exports and the duty drawback scheme.

Duty Drawback Scheme

Currently, the duty drawback scheme provides a mechanism for neutralising customs duty, central excise and service tax on any imported materials or excisable materials used or taxable services used as input services in the manufacture of export goods. Under GST, the duty drawback scheme would continue. However, the limitation extends to the customs duties on imported inputs and central excise duty on items specified in the Fourth Schedule to Central Excise Act 1944 (specified petroleum products, tobacco etc.) used as inputs or fuel for captive power generation. Further, the duty drawback scheme shall continue and exporters undertaking exports during this period can claim a higher duty drawback. However, it may apply certain conditions such as no input tax credit of CGST/IGST when claimed, no refund of IGST paid on export goods when claimed and no CENVAT credit when carried forward.

Claiming Higher Duty Drawback During Transitional Period

In case an exporter claims higher duty drawback during the transitional period, then a declaration from the exporter and certificate from jurisdictional GST officer must be attached to prevent double availment of neutralisation of input taxes. Similarly, the exporter can claim the brand rate for Customs, Central Excise duties and Service Tax during this period. Exporters also have the option of claiming only the Customs portion of AIR and claim refund/ITC under GST laws. However, whenever a higher rate of drawback is claimed, the non-availment of credit certificate is a mandatory document. Unless the certificate is provided, the shipping bill will not move to LEO stage. In such cases, to avoid unnecessary delay, exporters can amend the shipping bill to claim a lower rate. The exporter can file a supplementary claim as per the Drawback Rules at a later date after obtaining the certificate.

Read about the GST Rate for Customs Agents, Cargo Handling and Warehousing

Refund of IGST Paid for Exporters

Under GST, exporters can claim a refund of IGST paid under one of the following methods:

Without Payment of IGST

Under this method, the exporter can supply goods or services or both under bond or Letter of Undertaking without payment of integrated tax and claim a refund of a un-utilised input tax credit. Under this method, the procedure to file refund has been outlined in the Refund Rules under GST. The exporter claiming refund of IGST will file an application electronically through the GST Common Portal. Along with the refund application, export manifest or an export report must be filed for the refund.

With Payment of IGST

Under this method, the exporter can supply goods or services or both on payment of integrated tax and claim a refund of tax paid. Under this method, the shipping bill filed by an exporter shall be treated as an application for refund of integrated tax paid on the goods exported out of India. The applicability of the application shall apply only when the concerned individual carries out the export goods files and the application or the individual files valid returns along with the date of shipping bills or bills of export. For both methods, the exporters have to provide details of

GST invoice in the shipping bill.

Know more about imports under GST or GST Bill of Entry format.

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Frequently Asked Questions

Common questions about GST Refund and Duty Drawback Scheme for Exporters.

The duty drawback scheme under GST allows exporters to claim a refund or drawback of customs duties, central excise duties, and service tax paid on imported or locally procured inputs used in the manufacture of exported goods. It helps neutralize the taxes paid on inputs, making exports more competitive.

During the transitional period, exporters can claim a higher duty drawback rate. However, they must provide a declaration and obtain a certificate from the jurisdictional GST officer to prevent double neutralization of input taxes. The exporter must also not have availed input tax credit or refund of IGST paid on exported goods.

Exporters can claim a refund of IGST paid on exports in two ways: (a) Without payment of IGST by furnishing a bond or Letter of Undertaking and claiming refund of unutilized input tax credit, or (b) With payment of IGST and claiming a refund of the tax paid. In both cases, the exporter must file an application electronically through the GST Common Portal.

For claiming a refund of IGST paid on exports, exporters must provide details of GST invoices in the shipping bill or bill of export. Additionally, they must submit an export manifest or export report along with the refund application.

No, exporters cannot claim both duty drawback and IGST refund on the same exported goods. If they claim a higher duty drawback rate during the transitional period, they cannot claim a refund of IGST paid on those exported goods.

The non-availment of credit certificate is a mandatory document required when claiming a higher duty drawback rate during the transitional period. It serves as proof that the exporter has not availed input tax credit or refund of IGST paid on the exported goods, preventing double neutralization of input taxes.

Yes, if an exporter faces delays in obtaining the non-availment of credit certificate, they can amend the shipping bill to claim a lower duty drawback rate to avoid unnecessary delays. They can file a supplementary claim for the higher rate at a later date after obtaining the required certificate.

The duty drawback scheme allows exporters to claim a refund or drawback of duties and taxes paid on imported or locally procured inputs used in the manufacture of exported goods. This helps neutralize the taxes paid on inputs, making exported goods more competitive in the international market.

Under GST, the duty drawback scheme continues to provide a mechanism for neutralizing customs duties on imported inputs and central excise duties on specified excisable goods used as inputs or fuel for captive power generation. However, it does not extend to the refund of GST paid on inputs.

Under GST, exports are considered as zero-rated supply, meaning that no GST is payable on exported goods or services. This is because the end consumer of the exported goods or services is located outside India, and GST is a consumption-based tax applicable only within the country.