Deemed exports represent a significant aspect of the indirect tax system, particularly under the framework of the Goods and Services Tax (GST). While not a new concept, deemed exports carry specific implications and provisions outlined in the Integrated Goods and Services Tax (IGST) Act. Understanding the nuances of deemed exports is crucial for businesses engaged in international trade and for ensuring compliance with GST regulations. In this guide, we will delve into the intricacies of deemed exports under GST, including their definition, treatment of Input Tax Credit (ITC), reporting requirements in GST returns, and their broader implications for businesses operating in the GST regime.
Deemed exports refer to those transactions where goods supplied do not leave the country, and payment for such supplies is received either in Indian currency or in convertible foreign exchange. Under the GST regime, deemed exports are defined under the Integrated Goods and Services Tax (IGST) Act.
One of the key provisions regarding deemed exports under GST is the utilization of Input Tax Credit (ITC) on inputs used for the manufacture of deemed export goods. This credit can be utilized for the payment of tax on other taxable supplies, excluding nil-rated or fully exempted goods. However, to claim this benefit, a Chartered Accountant (CA) certificate must be submitted to the jurisdictional Commissioner of GST or any other authorized officer within six months of such supply.
In terms of reporting requirements, deemed export supplies need to be disclosed in both GSTR-1 and GSTR-3B forms. In GSTR-1, they are reported in Table 6C, where the registered dealer provides details of the invoice and tax paid on such supplies. In GSTR-3B, deemed exports are disclosed in Table 3.1(b), along with other zero-rated supplies.
Understanding the taxation of deemed exports under GST is crucial for businesses engaged in such transactions to ensure compliance with reporting and utilization of Input Tax Credit, thereby optimizing their tax obligations and operations.
