Important Check Points For the Exporters

Export of goods means taking goods out of India to a place outside India. To boost the exports the government provides various benefits/incentives to the exporters like to export the goods or services without payment of tax or to export on payment of IGST and then claim a refund of such IGST. Additionally under the FTP, the benefit of RODTEP is also available for the exporters. There are certain compliance which are to be followed by the exporters. In this article we will discuss those compliances in detail.

1. Classification and Documentation:
The exporters have to ensure that the products exported by them are properly classified as per the custom tariff. Since the claim of incentive schemes like Rodtep etc. would depend upon the HSN Code of the product exported by them.In addition to the proper classification of the products the exporter must ensure that the proper documentation is done for the exported product. The list of Key export documents are as follows:

(a) Tax Invoice & Commercial invoice
(b) The serial number of the tax invoice & commercial invoice should be the same to avoid difficulty in claiming the refund
(c) Shipping Bill/Bill of Export
(d) Packing List
(e) Certificate of Origin
(f) Inspection Certificate
(g) Guaranteed Remittance (GR) Form
(h) Bill of Lading / Airway Bill

2. Importer Exporter Code (IEC):
An Importer -Exporter Code (IEC) is a key business identification number which is mandatory for export from India or Import to India. No export or import shall be made by any person without obtaining an IEC unless specifically exempted. For services exports however, IEC shall not be necessary except when the service provider is taking benefits under the Foreign Trade Policy. Consequent upon introduction of GST, IEC being issued is the same as the PAN of the firm. However, the IEC will still be separately issued by DGFT based on an application.

Being an exporter, the person must ensure that he has valid Importer Exporter Code. In this respect it is important to note that every importer/exporter who has IEC has to renew it for every financial year. Hence it should be the duty of the exporter to ensure that the IEC is renewed by him every year.

3. Realization and Repatriation of Export Proceeds
Rule 96B of CGST Rules 2017 clearly states that where any refund of unutilised ITC on account of export of goods or of IGST paid on export of goods has been paid to an applicant but the sale proceeds in respect of such export goods have not been realised, in full or in part, in India within the period allowed under the FEMA, 1999 the person to whom the refund has been made shall deposit the amount so refunded, to the extent of non-realisation of sale proceeds, along with applicable interest within 30 days of the expiry of the said period.

As per FEMA guidelines the export proceeds must be realized and repatriated to India within 9 months from the date of export. For this Bank Realization Certificate (BRC) or E-BRC is proof of realization, accordingly the exporter should be aware of this and should obtain from your bank as proof of payment received for exports.

4. Registration-Cum-Membership Certificate (RCMC)
A Registration-Cum-Membership Certificate (RCMC) is a document that validates an exporter and their products are registered with an authorized government agency. It serves as proof of registration for five financial years and is issued by bodies like Export Promotion Councils (EPCs), Commodity Boards, or other competent authorities. This certificate is essential for exporters to benefit from the advantages outlined in the Foreign Trade Policy.

Hence the exporter must ensure that he has a valid RCMC license as this license is also required to be renewed for each financial year.

5. GST Compliances:
(A) Zero Rated Supply:
As per Section 16 of IGST Act 2017 the export of goods or services shall be treated as zero rated supply under GST. Also the exporters should be aware that there are two options to export the goods or services.
Option:1. Export under LUT: Supply goods or services without paying IGST and claim a refund of unutilized ITC.
Option:2. Export with Payment of IGST: Pay IGST on exports and subsequently claim a refund of the IGST paid.

(B) Accurate Reporting in GST Returns:
The exporter should have knowledge that reporting of supply would be done in the GSTR-1 and GSTR-3B as “Zero rated supply”. In this respect it is also important to note that at the time of filing GSTR-1 the details of shipping bills like shipping bill number, shipping bill date and port code should be properly filed in table 6A of GSTR-1.

If such details are not filed or incorrect details are filed and the export is done on payment of IGST then in said situation the details would not be transmitted to ICEGATE portal and the refund of such IGST amount would not be received.

(C) Declaration on the tax invoice issued for export:
Rule 46 of CGST Rules 2017 prescribes the particulars that tax invoice should have. As per this rule the in the case of goods or services are exported on payment of tax then the tax invoice shall carry an endorsement that “Supply meant for export on payment of Integrated Tax”.

However, if goods or services are exported on LUT basis then the tax invoice should carry an endorsement that “Supply meant for export under Bond or Letter of Undertaking without payment of Integrated Tax”

Disclaimer: The information given in this article is solely for purpose of understanding the law. It is completely based on the interpretation of the author and cannot be constituted as a legal advise, the author of this article and Lawcrux team is not responsible for any legal issues if arises on the basis of the interpretation given above.