OVERVIEW OF UNDERSTANDING EXPORT AND IMPORT CONCEPTS UNDER GST [2023]

Exports and imports hold significant importance in promoting economic growth. It facilitates cross-border transactions and earning foreign exchange. According to the GST laws, exports refer to the supply of products outside the Indian border. 

While imports comprise the supply of goods into India through foreign borders. It is worth noting that the integrated items and Services Tax (IGST) applies to imported items as per the IGST Act.

On the other hand, when goods are exported from India, they are classified as zero-rated supplies, meaning no tax is charged on them. If you also want to register your business for GST then you should get in touch with a trusted chartered accountant firm in India. 

So, let’s get started with our blog and discuss the procedure of Export and Import Under GST in detail.

An Overview Of GST

GST in India is a unified tax system implemented in India to streamline the taxation process. It has replaced multiple indirect taxes like excise duty, service tax, and VAT. It applies to the sale and provision of goods and services throughout the country.

When it comes to exports and imports, GST plays a key role. 

For exports, GST permits firms to enjoy zero-rated supply, meaning no tax is levied on the exported goods or services. This helps increase the competitiveness of Indian products in international markets.

Imports are subject to integrated goods and Services Tax (IGST), which is applied to goods arriving in India from outside nations. Understanding the GST import and export rules is essential for businesses engaged in global trade.

It is better to hire a reputed tax consultant in Gurgaon if you are unaware of the GST filing process. They can provide you with various taxation services and can guide you through the registration process.

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Import And Export Procedure Under GST

There are specific steps and compliance requirements for export and import in GST. Check out the detailed process given below –

Export Under GST

Stage 1

The items are carried from the exporter's location to the Container Freight Station for further transportation. To facilitate this movement, the exporter needs to generate an e-way bill, which serves as a document of transportation.

The e-way bill comprises vital information about the consignment, such as the sort of goods, their value, and the mode of transportation. This step ensures transparency and compliance with regulatory requirements.

Stage 2

Once the goods are delivered from the exporter to the Container Freight Station, they are then moved to the port or airport for further shipment.

Here is a list of some goods that are eliminated from carrying an e-way bill even for export and import under GST.

Diesel, kerosene, and petrol for any Indian aircraft

Paper money

Woolen fabric received as a gift from the Red Cross society.

Goods imported by the ambassadors or their families for consumption.

Goods delivered to or came from Nepal or Bhutan.

Import Under GST

There are four stages of import under GST which are as follows –

Stage 1

Once the products have reached the designated port or airport in India, they are considered to be formally imported.

Stage 2

At this step, the customs authorities take control of the goods and start the necessary operations for customs clearance.

Stage 3

After being in the custody of customs, the items are transported to either a CFS or an ICD for clearance. It is worth mentioning that according to Rule 138 of the GST, such transfers are exempted from the necessity of generating an e-way bill.

Stage 4

Following their transfer from the CFS or ICD the goods undergo extra transactions. They are either relocated to a bonded warehouse or directly delivered to manufacturers.

Read Also: Challenges Of Cross-border E-commerce And Solutions

What Is International Trade Export And Import?

The global economy depends heavily on the import and export of services under GST. The exchange of products and services between other nations is referred to as international trade. 

When a nation sells its products or services to other nations, it is said to be exporting. When it purchases products or services from other nations, it is said to be importing. International trade promotes economic growth by giving nations a large variety of goods.

Tax Treatment Of Import And Export Under GST To Nepal And Bhutan

Imports from Nepal and Bhutan are exempt from GST, which means no tax is charged to them. This exemption boosts trade and strengthens economic connections between India and other countries.

In the case of exports, there is a clause (paragraph 2.52) that lets Nepal and Bhutan export revenues be realized in Indian rupees. Even though the export proceeds are received in India, exports of goods to Nepal and Bhutan are treated the same as exports to any other country.

Read More: Top 13 Tax Planning Tips In India [2023]

TO Sum Up-

There has been a significant amount of GST impact on export and import. Exports are regarded as zero-rated supply and offer various export benefits under GST. Imports are subject to GST at the time of entrance into the nation.

Businesses can benefit greatly from the possibilities offered by global trade. It helps the economy grow and thrive by complying with the GST regulations.