CBIC clarifies on GST refunds related to deemed export, zero-rated supplies
March 12, 2021
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The Central Board of Indirect Taxes and Customs (CBIC) has come out with a clarification on GST refunds related to deemed export supply and zero-rated supply.
The board said that representations have been received on the difficulties being faced by the recipients of the deemed export supplies in claiming refund of tax paid in respect of such supplies since the system is not allowing them to file refund claim under the aforesaid category unless the claimed amount is debited in the electronic credit ledger.
Deemed export supply
The circular said though there is no restriction on recipient of deemed export supplies in availing ITC of the tax paid on such supplies when the recipient files for refund claim, but some restrictions emerged on account of Master Circular of 2019. Explaining this, Aditya Singhania, Founder at Singhania's GST Consultancy & Co, said supply of goods against Advance Authorization, supply of capital goods against EPCG authorisation, supply of goods to EOU and supply of gold by a bank or PSU against Advance Authorisation are categorised as deemed exports in GST with effect from October 18, 2017 in order to prevent cash blockage of exporters due to upfront payment of GST on imports as well as on domestic procurements. For this purpose, the rule was amended to allow either recipient or supplier of such supplies to claim refund of tax.