Impact of GST on Export of Goods and Services

GST or Goods and Services Tax is a tax reform introduced in India in 2017. The new tax regime has brought significant changes in the way business is done in the country. GST aims to unify the entire country under a single tax regime, which will simplify the tax structure and promote ease of doing business in India. However, the impact of GST on export of goods and services is a matter of concern for many business owners and startup founders in India.

In this article, we will discuss the impact of GST on export of goods and services and its implications for small and medium business owners and startup founders in India.

What is GST?

GST is a destination-based tax that is levied on the consumption of goods and services. GST replaced multiple indirect taxes such as excise duty, service tax, and value-added tax (VAT), which were levied by the central and state governments.

GST is a comprehensive tax system that is levied on all stages of the supply chain, from the manufacturer to the consumer. The tax rate for GST is determined by the GST Council, which is an apex body comprising of representatives from the central and state governments.

Impact of GST on Export of Goods and Services

The impact of GST on export of goods and services has been a topic of debate since its implementation. GST has brought some significant changes in the export of goods and services, which are discussed below:

1. Zero-rated supply

Under GST, export of goods and services are treated as zero-rated supplies. This means that exporters are not required to pay any tax on the export of goods and services. The GST paid on the inputs used in the production of goods and services can be claimed as a refund.

This has helped in reducing the tax burden on exporters and has made Indian goods and services more competitive in the global market. However, the process of claiming refunds can be cumbersome, which can cause delays in getting the refund.

2. Integrated Goods and Services Tax (IGST)

Under GST, a new tax called Integrated Goods and Services Tax (IGST) has been introduced. IGST is levied on the supply of goods and services from one state to another or from India to a foreign country. The tax revenue from IGST is shared between the central and state governments.

The introduction of IGST has simplified the tax structure for exporters as they don't have to deal with multiple tax structures of different states. This has also reduced the compliance burden on exporters.

3. GST Refunds

Exporters are eligible for a refund of the IGST paid on the export of goods and services. The refund process is online, and exporters are required to file a claim for a refund on the GST portal. The refund is processed within 60 days from the date of application. However, in some cases, the process can take longer.

The refund process can be complicated, and there have been instances where exporters have faced delays in getting the refund. However, the government has taken steps to simplify the refund process and reduce the turnaround time.

Conclusion

The impact of GST on export of goods and services has been a mixed bag. While GST has simplified the tax structure and reduced the compliance burden on exporters, the refund process can be cumbersome, and exporters have faced delays in getting the refund.

However, the government has taken steps to address these issues and has introduced measures to simplify the refund process. The introduction of IGST has also reduced the compliance burden on exporters and has made the tax structure more uniform.

In conclusion, the impact of GST on export of goods and services has been positive overall, and it has helped in promoting ease of doing business in India. However, there is still scope for improvement, and the government should take steps to further simplify the tax structure and streamline the refund process.