Section 2(39) of CGST Act: Deemed Exports Under CGST
Deemed Exports Under CGST
Understanding Deemed Exports
Deemed exports is a term used in
the context of the Goods and Services Tax (GST) in India. It refers to specific
supplies of goods that are treated as exports for tax purposes, even though the
goods themselves do not physically leave the country.
Defining Deemed Exports
According to Section 2(39) of the Central Goods
and Services Tax (CGST) Act, 2017, "deemed exports" are those
supplies of goods that are notified under Section 147 of the same Act.
Role of Section 147
Section 147 of the CGST Act empowers the
Central Government to notify certain supplies of goods as deemed exports. This
notification is made based on the recommendations of the GST Council.
To qualify as a deemed export under Section 147,
the following conditions must be met:
- Goods
must be manufactured in India.
- Payment
for the goods must be received either in Indian Rupees or convertible
foreign exchange.
- Goods
do not physically leave India.
Benefits of Deemed Export Status
Businesses that qualify for deemed export status
enjoy several benefits, including:
- Zero-rated
supply: The supply of goods is treated as a zero-rated supply,
meaning no GST is charged on the export.
- Refund
of input tax credit (ITC): Businesses can claim a refund
of the input tax credit paid on inputs used in the manufacture of the
deemed export goods.
- Boost
to exports: The scheme encourages exports by providing tax
incentives.
Examples of Deemed Exports
While the specific goods eligible for deemed
export status are determined by notifications issued under Section 147, some
common examples include:
- Supplies made to SEZs (Special Economic Zones)
- Supplies to EOUs (Export Oriented Units)
- Supplies under Advance Authorisation Scheme
- Supplies under Duty-Free Import Entitlement
Certificate Scheme
Conclusion
The concept of deemed exports under the CGST Act is a crucial aspect for businesses engaged in export-oriented activities. By understanding the criteria, benefits, and implications of deemed exports, businesses can optimize their tax planning and avail themselves of the incentives offered by the government.