GST Laws For Exported Goods: Does It Fall Under Disposable Income?

The COVID-19 pandemic has brought the world to a standstill and has impacted every business in some capacity. Due to the safety restrictions imposed by the government, companies have been unable to manufacture goods and offer services.

In the current scenario, exports have also suffered as goods have either not moved or haven’t reached the buyers. Moreover, there are good chances that the demand for their goods and services have reduced as consumer spending has also decreased.

If you are in a similar situation, you don’t have to seek answers from the gst customer care. We have all the answers for you. Let’s try to understand how the GST will impact exporters who are facing delays in shipments or payments.

What Is The Export Of Goods And Services Under GST?

Section 2(5) of IGST contains the definition of export of goods which is the trading or supplying of products and services outside the domestic territory of a country. As per section 2(6) of the same act, services are considered to be exported when the supplier is in India. The recipient of the service should be outside India.

How Does GST Apply To The Export Of Goods And Services?

GST does not apply to the export of goods and services. In the case of inter-state supply of goods, IGST is charged on exports. However, there is a term ‘zero-rated supply’ that exporters often come across.

Zero-rated supply means that the recipient of the export is liable to pay 0% GST to the supplier and the exporter can claim a refund for such supplies. However, it does not mean that the tariff rate for such goods and services is 0%. It ensures that taxes are not exported along with goods and services.

What Is The Export Of Goods And Services Under LUT?

To take the benefit of zero-rated supply, the exporter needs GST registration except for the suppliers of services with a turnover of less than 20 Lakhs. The registration can be done on the gst portal.

With a Letter of Undertaking (LUT), the business owner can export without paying IGST and also claim refunds for the input tax credit. The LUT needs to be on a valid letterhead of the exporter. Furthermore, it needs to be signed and sealed by an authorised person.

The LUT which fulfils these requirements is valid for 12 months. If the exporter does not have a LUT, then he may be asked to provide a bond.

How Can An Exporter Claim A Refund Of IGST?

The exporter can submit the shipping bill to avail refund of integrated tax. It will be considered as an application for a refund if the person responsible for the conveyance of goods files a report mentioning all the specifics of the transfer of goods. Secondly, the exporter also needs to furnish a valid return in the right GST form.

What Happens In The Case Of Non-Compliance In Terms Of Export Of Goods?

In the wake of COVID-19, the government has announced a slew of measures for the benefit of business owners. A notification dated 03.04.2020 states that the time limit for any compliance issues has been extended till 30.06.2020 for any activity for the period of 20.03.2020 to 29.06.2020.

However, no time will be extended for compliances under Section 39(1) and Section 50 along with other notified provisions of the CGST Act.

Does The Exporter Need To Pay GST Along With Interest For Non-Delivery Of Goods Due To The Lockdown?

As per the CGST Act, the commissioner holds the discretionary power to extend the due date of compliance for exports of goods and services. If you have faced delays in exporting products, you can approach the commissioner to avoid tax burden and other liabilities.

Moreover, a circular issued last year states that payment of integrated tax and refund claims cannot be insisted even after three months of export.


As described above, the government is cognizant of the problems of exporters and is announcing relaxations to ease their financial burden. As an exporter, you can approach the jurisdictional commissioner for reducing the rules in paying unnecessary tax, interest and any compliance-related queries.

You can request for additional time if you have been unable to export your goods due to COVID-19 restrictions.