The sign board on India’s export gates reads as ‘beware of rule 96(10)’
January 10, 2021, 3:38 PM IST
Ratan Jain, Partner & Saurabh Malpani, Principal Associate, Lakshmikumaran & Sridharan Attorneys.
Enquiry notices are being issued by investigation authorities to various exporters on ensuring compliance with Rule 96(10) of Central Goods and Services Tax Rules 2017 (CGST Rules). This article intends to discuss the issues under Rule 96(10).
IGST Exemption Introduced Under Export Promotion Schemes
There are various export promotion schemes implemented by the Government of India. For example, Advance Authorization (“AA”) scheme implemented through Chapter 4 of the Foreign Trade Policy (“FTP”) 2015-20 read with applicable Customs Notification. The said scheme allows import of inputs, without payment of Basic Custom Duty (BCD) and Integrated Goods and Service Tax (IGST), subject to fulfilment of certain conditions and obligations. The exemption from IGST was not introduced initially at the time of introduction of GST. However, with representation from exporters for avoiding capital blockage, government introduced exemption from IGST from 13.10.2017. By way of several extensions, the said exemption is now available up to 31.03.2021. Also, GST paid on domestic procurement of goods are refunded on supplies made to AA holder. Similar exemption from IGST is also available under Export Oriented Unit (EOU) scheme laid out under Chapter 6 of FTP. The object of these above schemes is to avoid working capital blockage for exporters in payment of taxes.