While dealing with export, exporters need to follow GST and foreign exchange norms to receive payment from foreign customers. In this regard, recent clarification by the Central Board of Indirect Taxes and Customs (CBIC) covers the area of payment for exports and for refund recoverability if export proceeds are not realized.
It is essential for exporters to understand the refund mechanism for GST in detail to handle refunds, to keep records and to avoid non-compliance. In addition, it is important to do the right GST Return Filing for exporters to report transactions correctly.
Key GST Clarifications for Exporters
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Payment in Indian Rupees for Exports
Payment in Indian Rupees in permitted arrangements can be received by the exporters, subject to compliance with the provisions of the Reserve Bank of India (RBI) and other legal requirements.
It is advised to the businesses to check their payment modes and keep related bank records for this purpose. As per the GST refund rules for exporters, they should ensure that all conditions are fulfilled for such transactions.
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Refund Recovery for Unpaid Export Proceeds
Under Rule 96B of CGST Rules, the situation is covered where the exporter gets refund of exported goods but does not realise the export proceeds within the time permitted. The following are the important points in brief.
- Refund repayment: Exporters may have to repay the refund proportionate to the un-realised export proceeds (with interest, if any).
- Repayment deadline: Payment shall be made within 30 days from the expiry of the permitted period of realisation.
- Exceptions: It may not be recoverable, if the authorised bank writes off the requirements of realisation, fully or partly, on merit.
- Subsequent realisation: If the payment is received later by the exporter in an extended time as permitted by RBI, the recovery amount may be claimed again with evidence to be filed within 3 months from the date of realisation.
Thus, payment tracking is an important aspect in the GST refund rules for exporters.
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Special Banking Arrangements
Certain kinds of exports require special banking facilities such as Special Non-Resident Rupee (SNRR accounts) & authorised adjustments between export receivables and import payables. While making the payment, exporters should keep in mind the RBI requirements for such payments. Maintaining necessary documentation could help you to adhere to rules and minimize disputes over refunds etc.
What Should Exporters Do?
To avoid non-compliance and avoid any risks as a business one should,
- Maintain records: like export invoices, shipment documents, bank statements etc.
- Monitor the payment: monitor the outstanding invoices and proper dates of realisation.
- Check the eligibility for refund: please read the GST refund rules for exporters before making any claims.
- GST Return Filing: proper reconciliation and reporting of export related transactions in the relevant returns.
- Get professional advice: if there is any doubt on payment terms or any eligibility for refund of payment etc, seek professional advice.
Impact on Exporters’ GST Compliance
In this clarification, it is highlighted that there is a need for coordination between export payment records and GST compliance. Exporters should do a periodical reconciliation of export invoices, bank receipts and refund claims to identify any discrepancy at the earliest.
Such accurate documentation also assists in GST Return Filing. This also helps exporters to see whether they can avail benefit of GST refund for exporters as per the rules. In case of a pending payment, they should check the relevant payment realisation date and consult professionals before taking any action.
Conclusion
Latest clarifications are helpful to understand export payments, how to settle payments and recovery of refunds. Exporters should check their payment mechanism, keep proper documents. Also make sure RBI & GST requirements are fulfilled. On-time GST Return Filing & timely tracking of export proceeds would be very helpful for businesses.
FAQs
Q1. Can exporters get payment in INR?
Yes, payment through a permitted and repatriable rupee account may be considered for fulfilling the conditions of GST subject to RBI regulation.
Q2. What if the export proceeds are not paid?
In accordance with Rule 96B, the exporters may have to pay the respective refund along with interest (if any) in case of unrealized export proceeds beyond the prescribed time limit. However, specific exemptions can be available.
Q3. How can the exporters comply with the GST refund?
Accurate records, tracking payment deadlines and GST Return Filing on time. Understanding GST Refund for exporters by referring to the rules.
Q4. What documents should be maintained by exporters for refund claims of GST?
Documents like export invoices, shipping bills, bank statements, payment documents and such other documents that are necessary for their claim of refund, should be maintained by exporters.
Q5. Can exporters get a refund when the overseas buyer delays the payment?
If the exporter does not realise the export proceeds within the allowed period, he may have to refund the amount. Exporters need to check the rules and the exceptions if any to claim/reclaim such refund.
Moreover, if you want any other guidance relating to GST refund rules for exporters, please feel free to talk to our business advisors at 8881-069-069.
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