An export business—goods or services—operates under the zero-rated framework of Section 16 of the IGST Act. The benefit is conditional on the five Section 2(6) conditions: supplier in India; recipient outside India; place of supply outside India; payment in convertible foreign exchange or permitted Indian rupees; and supplier and recipient not establishments of the same person. A single failed condition converts the export into a taxable supply.
The LUT and Refund Route
The exporter may supply under a LUT in Form GST RFD-11 without payment of IGST and claim refund of accumulated ITC, or pay IGST and claim refund under the alternative route. The LUT is valid for one financial year and must be renewed. The refund claim must reconcile the export invoices, the GSTR-1, the GSTR-3B and the bank realisation.
The Realisation Discipline
Section 16(3) requires realisation within the FEMA period or an RBI-approved extension. Rule 96B provides for recovery where the proceeds are not realised. The exporter should maintain a realisation tracker, the FIRC/bank advice and the invoice-wise mapping. A Rule 96B notice should be answered with the realisation evidence or the RBI permission.
The Establishment Condition
A foreign subsidiary is a separate legal entity and satisfies the establishment condition; a foreign branch of the Indian exporter is an establishment of the same person and fails the condition. The exporter should map the foreign recipient’s legal relationship before treating the supply as an export.
What the Consultant Does
The consultant assists with the LUT, the export documentation, the realisation tracking and the refund claim. The value is in the documentation that satisfies all five conditions.
Call to Action: We advise export businesses on LUT, realisation tracking and refund documentation. For an export-compliance review, contact office@anujdesaiassociates.com, Ph No. 9619456656, Website https://anujdesaiassociates.com, LinkedIn linkedin.com/in/ca-anuj-desai-122547230.