Export Without Payment of Tax

Export without payment of tax refers to the process where goods are exported from one country to another without the exporter having to pay domestic taxes on the goods being shipped. This concept is essential in promoting international trade by reducing the tax burden on exporters and making their products more attractive in the global market.

Exporters who export goods or services under LUT without payment of IGST can claim GST refund of the unutilized ITC on inputs and input services used in making such exports by filling a refund application in Form GST RFD-01 on the GST portal.

Process

1. Furnishing Bond/LUT

•  Exporters need to submit a Bond or LUT to the tax authorities. It is document that exempts exporters from paying IGST on export services. It signifies an exporters commitment to comply with export regulations and is filed with GST authorities.

2. Preparation of Required Documents

•  Essential documents include the export invoices, shipping bills, Bank Realization Certificate (In case of Export of Goods), Foreign inward remittance certificates (In case of Export of Services), Invoice wise details of GSTR 1 and GSTR 2B, Declarations as per Section 54 of CGST Act 2017 and Rule 89.
• A Statement 3 is required to be uploaded in the GST Portal which includes details of Invoices, FOB Values, Shipping Bills, EGM Filed.
• An Annexure B is required to be made containing the details of purchase invoices of which we are claiming the refund. It excludes the Input tax credit, which is either Blocked, Ineligible or Capital in nature.

3. Filing of Returns

•  Exporters must file regular returns with the tax authorities, detailing the export transactions and claiming any input tax credits. If the returns are not filled the Tax-Payer cannot claim Refund.

4. Filling of Refund

•  Once all the workings are completed a Refund Application i.e. (RFD-01) is filed under Refund Type” Refund of ITC on Export of Goods & Services without Payment of Tax” through logging in the GST Portal.

Shipping Bills

• A shipping bill is an official document required by customs authorities for the clearance of goods intended for export. It contains detailed information about the goods being shipped, including their description, quantity, value, and destination. The shipping bill acts as a declaration by the exporter, confirming that all the information provided is accurate and that the goods comply with the export regulations of the originating country.

Challenges Faced

•  Manual punching of Data in Statement 3 such as shipping bill details, EGM details, BRC/FIRCs details.
• Non-reporting of Shipping bills details in GSTR-1 result in delay in filing refund application.
•  There are multiple errors that needs to be rectified while uploading Statement 3 on GST portal, this is time consuming task
• Non availability of documents such as Export invoices and shipping bills, BRC/ FIRCs results in lesser claim of refunds.

MGR Tool Solving Problems

•  To claim GST refund of ITC for exports under LUT, using MGR Tool you simply need to input your GSTN Number and the period for which the refund is being claimed. The tool will automatically retrieve the necessary data from the GST portal, complete the calculations in seconds, and generate a summary report.
  This report will detail the amount of refund you are eligible to claim, streamlining the process and saving you valuable time.

MGR Comments

•  Integrating MGR tool into the GST refund process can be a game-changer for businesses, especially the exporters. It not only simplifies the complex task of data retrieval and calculations but also minimizes errors and accelerates the entire process. This tool is particularly beneficial for those looking to optimize their time by swiftly and accurately claiming refunds.