Applicability of GST on export of pre-packaged and labelled rice upto 25 kg

India is one of the largest exporters of rice in the world. With the implementation of GST in 2017, there has been a lot of confusion regarding the applicability of GST on the export of pre-packaged and labelled rice up to 25 kg. In this article, we will discuss in detail the applicability of GST on the export of pre-packaged and labelled rice up to 25 kg.

What is GST?

Goods and Services Tax (GST) is a comprehensive tax levied on the supply of goods and services in India. It is a destination-based tax that replaces several indirect taxes levied by the central and state governments. GST has made the taxation system simpler by eliminating the cascading effect of taxes.

Export of Pre-packaged and Labelled Rice up to 25 kg

The export of pre-packaged and labelled rice up to 25 kg falls under the category of Zero-rated supplies. Zero-rated supplies refer to supplies of goods and services that are not taxable under GST. The export of pre-packaged and labelled rice up to 25 kg can be done either under Bond or Letter of Undertaking (LUT).

Bond or Letter of Undertaking (LUT)

Exporters have the option of either furnishing a bond or Letter of Undertaking (LUT) for exporting goods without payment of integrated tax. A bond is a legal agreement in which an exporter undertakes to pay the amount of the bond along with interest in case of any default. A Letter of Undertaking (LUT) is a written assurance given by an exporter that he would fulfill all the requirements under GST law.

Applicability of GST on Export of Pre-packaged and Labelled Rice up to 25 kg

As mentioned earlier, the export of pre-packaged and labelled rice up to 25 kg falls under the category of Zero-rated supplies. However, exporters need to fulfill certain conditions to avail the Zero-rated supplies benefit. The conditions are as follows:

The exporter must have a valid GST registration.
The exporter must furnish a Bond or LUT.
The exporter must export the goods within 3 months from the date of issue of the invoice.
The exporter must receive the payment in foreign currency.
The exporter must file the relevant export documents.

If the exporter fulfills all the conditions mentioned above, the export of pre-packaged and labelled rice up to 25 kg will not attract any GST.

Conclusion

The export of pre-packaged and labelled rice up to 25 kg falls under the category of Zero-rated supplies. The exporters need to fulfill certain conditions to avail the Zero-rated supplies benefit. The GST on the export of pre-packaged and labelled rice up to 25 kg can be done either under Bond or Letter of Undertaking (LUT). It is advisable for exporters to be aware of the conditions to avoid any penalties.