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Published on:
February 20, 2023
By
Pranjal Gupta

Restrictions Under CGST Rule 96(10)  Deemed Export under GST: Guidelines for Businesses

Introduction:

The introduction of the Goods and Services Tax (GST) has brought about significant changes in the Indian tax system, replacing multiple taxes with a single unified tax. Under GST, exports are zero-rated, meaning that no tax is levied on exported goods or services. However, there are certain restrictions and rules that businesses need to follow to avail of these benefits.

In this article, we will discuss the restrictions under CGST Rule 96(10) and deemed exports under GST.

Restrictions under CGST Rule 96(10):

CGST Rule 96(10) states that a registered person can claim a refund of any unutilized input tax credit (ITC) only if such credit has accumulated on account of:

  1. Zero-rated supplies made without payment of tax
  2. Input goods or services or both used in making such zero-rated supplies

However, this refund is subject to certain restrictions, the details of which are given below:

  1. The registered person should not have any outward supply of goods or services or both
  2. The registered person should not have any inward supply of goods or services or both
  3. The registered person should not have any tax liability

Deemed Export under GST:

Deemed exports are supplies of goods that do not leave India but are treated as if they have been exported. The following transactions are treated as deemed exports under GST:

  1. Supply of goods against an advance authorization
  2. Supply of capital goods against the Export Promotion Capital Goods (EPCG) scheme
  3. Supply of goods to an Electronic Hardware Technology Park (EHTP) unit or a Software Technology Park (STP) unit
  4. Supply of goods to a United Nations or international organization for their official use or for implementation of aid-funded projects

Deemed exports are eligible for a refund of taxes paid on the inputs used in the manufacture of the goods supplied. However, the following conditions must be met:

  1. The supplier should not claim input tax credit on the tax paid on such supplies
  2. The recipient of the supply should be located in India
  3. The recipient of the supply should be eligible for a refund of the tax paid on such supplies or should have paid the tax under a claim of refund

Conclusion:

It is important for businesses to understand the restrictions under CGST Rule 96(10) and the rules governing deemed exports under GST to ensure that they comply with the regulations and benefit from the available refunds. By following the guidelines, businesses can minimize their tax liability and streamline their operations.

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Updated on:
March 16, 2024