Certificate by Chartered Accountant in case of deemed exports

Introduction

As per Sec 147 of CGST Act,2017 The Government may, on the recommendations of the Council, notify certain supplies of goods as deemed exports, where goods supplied do not leave India, and payment for such supplies is received either in Indian rupees or in convertible foreign exchange, if such goods are manufactured in India.

Accordingly the central govt by Notification 48/2017-Central Tax has been notified the Some of the supplies as Deemed supplies.

Where as on the other hand, the Central Government had notified the new Indian Accounting Standards (‘Ind AS’) vide the Companies (Indian Accounting Standards) Rules, 2015 which laid down a roadmap for implementation of Ind AS.

Further By Notification 01/2019-central Tax Amended one of the supply notified in the principal notification. The Detailed discussion of the notification discussed here.

Deemed Exports:

  • Supply of goods by a registered person against Advance Authorisation.
    • Provided that goods so supplied, when exports have already been made after availing input tax credit on inputs used in manufacture of such exports, shall be used in manufacture and supply of taxable goods (other than nil rated or fully exempted goods) and a certificate to this effect from a chartered accountant is submitted to the jurisdictional commissioner of GST or any other officer authorized by him within 6 months of such supply,
    • Provided further that no such certificate shall be required if input tax credit has not been availed on inputs used in manufacture of export goods. (**Amended by Notification 01/2019-central Tax)
  • Supply of capital goods by a registered person against Export Promotion Capital Goods Authorisation.
  • Supply of goods by a registered person to Export Oriented Unit
  • Supply of gold by a bank or Public Sector Undertaking specified in the Notification No. 50/2017-Customs, dated the 30th June, 2017 (as amended) against Advance Authorization.

“Advance authorization” means an authorization issued by the Director General of Foreign Trade under Chapter 4 of the Foreign Trade Policy 2015-20 for import or domestic procurement of inputs on pre-import basis for physical exports. Export Promotion Capital Goods Authorization means an authorization issued by the Director General of Foreign Trade under Chapter 5 of the Foreign Trade Policy 2015- 20 for import of capital goods for physical exports.

“Export Oriented Unit” means an Export Oriented Unit or Electronic Hardware Technology Park Unit or Software Technology Park Unit or Bio-Technology Park Unit approved in accordance with the provisions of Chapter 6 of the Foreign Trade Policy 2015-20.

Example

Mr. X is a registered Taxable person supplied goods (Not services) against Advance authorization to Mr. Y(who is the Holder of advance authorisation),

Mr. Y used the goods supplied by Mr. X, for supply of Exports and availed Input tax Credit on inputs used in manufacture of such exports.

In this case, if Mr. X wants to claim the benefit of Deemed Exports, the goods supplied by Mr.x shall be used in the manufacture and Supply of taxable goods (other than Nil rated or fully exempted goods, and a certificate to this effect from a chartered accountant is submitted to the jurisdictional commissioner of GST or any other officer authorized by him within 6 months of such supply.

In case, if Mr. Y has not been availed the input tax credit on inputs used in manufacture export of goods, then no certificate is required from Chartered Accountant to avail benefit of deemed exports by Mr.X.

Important Instruction:

Deemed exports are not zero rated supplies by default, unlike the regular exports. Hence all supplies notified as supply for deemed export will be subject to levy of taxes i.e. such supplies can be made on payment of tax and cannot be supplied under a Bond/LUT.

Disclaimer:"The information contained herein is only for informational purpose and should not be considered for any particular instance or individual or entity. We have obtained information from publicly available sources, there can be no guarantee that such information is accurate as of the date it is received or it will continue to be accurate in future. No one should act on such information without obtaining professional advice after thorough examination of particular situation."

Prepared By

Sindhu M

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Ankit C Shetty

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