MONITORING/RE-VALIDATION PROCEDURES FOR EXPORT PROMOTION SCHEMES

The following guidelines has been issued by DGFT vide F.No. 18/01/HQ/2017-18/ECA II/534 dt 28.07/2017 for monitoring / revalidation of Bank Guarantee / essentially states as follows:

Relevant provisions of FTP (2009-14) and FTP (2015-20) are reproduced below:

  • Para 2.27 FTP 2009-14 provides that wherever any duty free import is allowed or where otherwise specifically stated, importer shall execute prescribed LUT / BG / Bond with Customs Authority before clearance of goods. In case of indigenous sourcing, Authorisation holders shall furnish LUT/ BG / Bond to RA concerned before sourcing material from indigenous supplier / nominated agency a prescribed in HBP v1.
  • Para 2.35 of FTP 2015-2020 provides that (a) wherever any duty free import is allowed or where otherwise specifically stated, importer shall execute, Legal Undertaking (LUT) / Bank Guarantee (BG) / Bond with the Customs Authority, as prescribed, before clearance of goods; and (b) in case of indigenous sourcing, Authorisation holder shall furnish LUT/BG/Bond to RA concerned before sourcing material from indigenous supplier / nominated agency as prescribed in Chapter 2 of Handbook of Procedures.
  • Similarly, corresponding provisions laid down in Para 2.20 of HBP 2009 – 14 (Vol. I) and Para 2.29 of HBP 2015-20 stipulate that in case of indigenous sourcing, Authorization holder shall furnish BG / LUT to RA as per Customs Circular No. 58/2004 dated 31.10.04, as amended from time to time. In case, the firm has already executed BG/LUT for the full value of the licence/ certificate / authorization / permission (covering the items indigenously Procured) to the Customs and furnishes proof of the same to Regional Authority (RA), no BG/LUT shall be required to be executed with the RA. The RA concerned shall endorse on the authorization that the Customs Authority shall release / redeem BG/LUT only after receipt of NOC or EODC from the RA concerned. RA shall endorse a copy of the same along with a forwarding letter to the Customs Authority at the Port of registration for their information and record.
  • Therefore, all the RAs are directed to update the Bank Guarantee Register. RAs would ensure that all the BGs, where the export obligation has not been fulfilled or case has not been redeemed, shall be entered in the BG Register and this Register shall be checked by the concerned Dy. DGFT/J. GDFT/Addl. DGFT on 5th of every month so as to ensure that all Bank Guarantees (received earlier and during the last month) have been entered properly and action taken as and when required as per the provisions of the FTP/HBP. Necessary steps for extension of validity period of BG may be taken by the RA at least three months before the expiry of the validity. It must be ensured by the RA that the decision to either enforce the BG or to get it extended for at least one year 03 months before expiry of validity. The decision to either enforce or get the BG extended must be taken by Head of the office, as this as revenue implications.
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GUIDANCE NOTE FOR EXPORTERS AND IMPORTERS UNDER GST

 

 

 

  1. Introduction:

 

The purpose of this guidance note is to bring clarity about the impact of GST, which would come into force with effect from 01.07.2017, for importers and exporters.

On the imports side there would be no impact on levy of Basic Customs duty, Education Cess, Anti-dumping duty, Safeguard duty and the like. However, the Additional duties of Customs, which are in common parlance referred to as Countervailing Duty (CVD) and Special Additional duty of Customs (SAD), would be replaced with the levy of Integrated Goods and Services Tax(IGST), barring a few exceptions. On the exports side, export would be treated as zero-rated supply. Under zero-rated supply IGST paid on export goods or the input tax credit proportionate to the goods and services consumed in goods exported under bond /LUT would be refunded.

 

A brief summary of the changes that would impact importers and exporters upon roll out of GST are

encapsulated below:

 

Imports under GST

 

  1. Duties at the time of import:

 

In the GST regime, IGST and GST Compensation cess will be levied on imports by virtue of subsections (7) &(9) of Section 3 of the Customs Tariff Act, 1975. Barring a few commodities such as pan masala, certain petroleum products which attract levy of CVD, majority of imports would attract levy of IGST. Further, a few products such as aerated waters, tobacco products, motor vehicles etc, would also attract levy of GST Compensation Cess, over and above IGST. IGST and GST Compensation cess, wherever applicable, would be levied on cargo that would arrive on or after 1st July, 2017. It may also be noted that IGST would also be levied on cargo which has arrived prior to 1st July but a bill of entry is filed on or after 1st July 2017.Similarly ex-bond bill of entry filed on or after 1 st July 2017 would attract IGST and GST Compensation cess, as applicable. In the case where cargo arrival is after 1st July and an advance bill of entry was filed before 1st July along with the payment of duty, the bill of entry may be recalled and reassessed by the proper officer for levy of IGST and GST compensation Cess, as applicable.

 

III. Duty Calculation:

 

IGST rate: IGST rates have been notified through notification 01/2017-Integrated Tax (Rate), dated 28-06-2017. IGST rate on any product can be ascertained by selecting the correct Sl. No. as per description of goods and tariff headings in the relevant schedules of the notification. Importers are advised to familiarize themselves with IGST and GST compensation cess rates, schedule and exemptions which are available on CBEC website. The Customs duty calculator would be made available on CBEC and ICEGATE website. There are seven rates prescribed for IGST- Nil, 0.25%, 3% 5%, 12%, 18% and 28%. The actual rate applicable to an item would depend on its classification and would be specified in Schedules notified under section 5 of the IGST Act, 2017. The rates applicable to goods of Chapter 98 are as under:

  • 9801- Project Imports- 18%
  • 9802- Laboratory Chemicals- 18%
  • 9803- Passenger baggage – Nil Rate
  • 9804- Specified Drugs and medicines for personal use- 5%
  • 9804- Other drugs and medicines for personal use- 12%
  • 9804- All other dutiable goods for personal use- 28%

 

Likewise, different rates of tax have been notified for goods attracting Compensation Cess which is leviable on 55 item descriptions (of supply). These rates are mostly ad valorem. But some also attract either specific rates (e.g. coal) or mixed rates (ad valorem + specific) as for cigarettes. The coverage of the goods under GST compensation cess is available on CBEC website along with their HSN codes and applicable cess rates. The IGST Rates of Goods, Chapter wise IGST rate, GST Compensation Cess rates, IGST Exemption/Concession are available on CBEC website for trade and departmental officers as well.

Valuation and method of calculation: IGST is leviable on the value of imported goods and for calculating integrated tax on any imported article, the value of such imported goods would be the aggregate of –

(i) the value of imported article determined under sub-section (1) of section 14 of the Customs Act, 1962 or the tariff value fixed under sub-section (2) of the that section and

(ii) any duty of Customs chargeable on that article under section 12 of the Customs Act, 1962 and any sum chargeable on that article under any law for the time being in force as an addition to, or as duty of Customs but does not include to the tax referred in the sub-section 7 (IGST) and sub-section 9 (Compensation Cess).

 

The value of the imported article for the purpose of levying GST Compensation cess shall be, assessable value plus Basic Customs Duty levied under the Act, and any sum chargeable on  the goods under any law for the time being in force, as an addition to, and in the same manner as, a duty of customs. These would include education cess or higher education cess as well as anti-dumping and safeguard duties. The inclusion of anti-dumping duties and safeguard duty in the value for levy of IGST and Compensation Cess is an important change. These were not hither to included in the value for the levy of additional duty of customs (CVD) or Special Additional Duty (SAD).The IGST paid shall not be added to the value for the purpose of calculating Compensation Cess.

 

Although BCD, Education Cesses and IGST would be applicable in majority of cases, however, for some products CVD, SAD or GST Compensation cess may also be applicable. For different scenarios the duty calculation process has been illustrated in Annexure – I of this document.

 

  1. Changes in import procedures:

Importer Exporter Code (IEC): In GST regime, GSTIN would be used for credit flow of IGST paid on import of goods. Therefore, GSTIN would be the key identifier. DGFT in its Trade Notice No. 09 dated 12.06.2017 has stated that PAN would be the Import Export code (IEC).

However, while PAN is identifier at the entity level, GSTIN would be used as identifier at the transaction level for every import and export. Further, in scenarios where GSTIN is not applicable, UIN or PAN would be accepted as IEC. It is advised that all importers need to quote GSTIN in their Bills of Entry in addition to IEC. In due course of time IEC would be replaced by

PAN / GSTIN.

Bill of Entry Regulations and Format: To capture additional details in the Bill of entry such as GSTIN, IGST rate and amount, GST Compensation Cess and amount, the electronic as well as manual formats of Bill of entry including Courier Bill of entry are being amended. For the benefit of the trade, modified Forms have been hosted on the departmental website, http://www.cbec.gov.in.

Further, suitable notifications shall be issued to amend the relevant regulations and introduce modified Forms.

 

  1. Import under Export Promotion Schemes and duty payment through EXIM scrips:

Under the GST regime, Customs duties will be exempted on imports made under export promotion schemes namely EPCG, DEEC (Advance License) and DFIA. IGST and

Compensation Cess will have to be paid on such imports.

The EXIM scrips under the export incentive schemes of chapter 3 of FTP (for example MEIS and

SEIS) can be utilised only for payment of Customs duties or additional duties of Customs, on items not covered by GST, at the time of import. The scrips cannot be utilized for payment Of Integrated Tax and Compensation Cess. Similarly, scrips cannot be used for payment of CGST, SGST or IGST for domestic procurements.

 

  1. EOUs and SEZ:

EOUs/EHTPs/STPs will be allowed to import goods without payment of basic customs duty (BCD) as well additional duties leviable under Section 3 (1) and 3(5) of the Customs Tariff Act.

GST would be leviable on the import of input goods or services or both used in the manufacture by EOUs which can be taken as input tax credit (ITC). This ITC can be utilized for payment of GST taxes payable on the goods cleared in the DTA or refund of unutilized ITC can be claimed under Section 54(3) of CGST Act. In the GST regime, clearance of goods in DTA will attract GST besides payment of amount equal to BCD exemption availed on inputs used in such finished goods. DTA clearances of goods, which are not under GST, would attract Central Excise duties as before.

 

VII. Imports / Procurement by SEZs

Authorised operations in connection with SEZs shall be exempted from payment of IGST. Hence, there is no change in operation of the SEZ scheme.

 

VIII. Project Import:

Currently for items imported under project import scheme (i.e. CTH 9801), unique heading under the Central Excise Tariff, for the purposes of levy of CVD does not exist. Therefore, under the Central Excise Tariff, each item is getting classified in a heading as per its description and duty is paid on merit. In the GST regime, for the purpose of levying IGST all the imports under the project import scheme will be classified under heading 9801 and duty shall be levied @ 18%.

 

  1. Baggage:

Full exemption from IGST has been provided on passenger baggage. However, basic customs duty shall be leviable at the rate of 35% and education cess as applicable on the value which is in excess of the duty free allowances provided under the Baggage Rules, 2016.

  1. Refunds of SAD paid on imports:

The need for SAD refunds arose mainly on account of the fact that traders or dealers of imported goods were unable to take credit of this duty (which was a Central tax) while discharging their VAT or Sales tax liability (which was State levy) on subsequent sale of the goods. Unless  corrected through a mechanism such as refund (of one of the taxes) this would have resulted in “double” payment of tax.

With the introduction of GST on 01.07.2017, credit of “eligible duties” in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock, is permissible to registered persons not liable to be registered under the existing law (for instance, VAT dealers) under transitional provisions (Section 140(3) of the CGST Act). Further, eligible duties as defined in sub-section (10) include SAD. In other words, dealers/ traders can take ITC of SAD paid on goods imported prior to 1st July 2017. Sub-section (5) of section 140 also allows a registered person to take credit of eligible duties in respect of inputs received on or after 1 July 2017 but the duty on which has been paid under the existing law. These provisions taken together ensure that SAD paid by dealers/ traders can be set-off against their GST liability as and when imported goods are supplied by them in the domestic market. However, certain items which are out of the GST net would be eligible for SAD refunds as earlier.

 

  1. Imports and Input Tax Credit (ITC):

In GST regime, input tax credit of the integrated tax (IGST) and GST Compensation Cess shall be available to the importer and later to the recipients in the supply chain, however the credit of basic customs duty (BCD) would not be available. In order to avail ITC of IGST and GST Compensation Cess, an importer has to mandatorily declare GST Registration number (GSTIN) in the Bill of Entry. Provisional IDs issued by GSTN can be declared during the transition period.

However, importers are advised to complete their registration process for GSTIN as ITC of IGST would be available based on GSTIN declared in the Bill of Entry. Input tax credit shall be availed by a registered person only if all the applicable particulars as prescribed in the Invoice Rules are contained in the said document, and the relevant information, as contained in the said document, is furnished in FORM GSTR-2 by such person.

Customs EDI system would be interconnected with GSTN for validation of ITC. Further, Bill of Entry data in non-EDI locations would be digitized and used for validation of input tax credit provided by GSTN. Exports under GST

 

XII. Drawback:

No amendments have been made to the drawback provisions (Section 74 or Section 75) under Customs Act 1962 in the GST regime. Hence, the drawback scheme will continue in terms of both Section 74 and section 75. Option of All Industry Rate (AIR) as well as Brand Rate under

Section 75 shall also continue.

Drawback under Section 74 will refund Customs duties as well as Integrated Tax and

Compensation Cess paid on imported goods which are re-exported.

At present Duty Drawback Scheme under Section 75 neutralises Customs duty, Central excise duty and Service Tax chargeable on any imported materials or excisable materials used or taxable services used as input services in the manufacture of export goods. Under GST regime, Drawback under Section 75 shall be limited to Customs duties on imported inputs and Central Excise duty on items specified in Fourth Schedule to Central Excise Act 1944 (specified petroleum products, tobacco etc.) used as inputs or fuel for captive power generation.

A transition period of three months is also being provided from date of implementation of GST i.e. 1.7.2017. During this period, existing duty drawback scheme under Section 75 shall continue.

For exports during this period, exporters can claim higher rate of duty drawback (composite AIR) subject to conditions that no input tax credit of CGST/IGST is claimed, no refund of IGST paid on export goods is claimed and no CENVAT credit is carried forward. A declaration from exporter and certificate from jurisdictional GST officer in this regard has been prescribed in the notification related to AIRs. This will prevent double availment of neutralisation of input taxes.

Similarly, the exporter can claim brand rate for Customs, Central Excise duties and Service Tax during this period.

Exporters also have the option of claiming only the Customs portion of AIR and claim refund/ITC under GST laws.

All Industry Rates for the transition period shall be notified before 1.7.2017. The AIR for post transition period shall be notified in due course of time.

The certificates from jurisdictional GST officer as referred above may not be available during initial days. As per Systems design, whenever higher rate (composite rate) of drawback is claimed, the non-availment of credit certificate is a mandatory document and unless it is recorded as available, shipping bill will not move to LEO stage. In such a situation, all field formations shall ensure that exports are not delayed for requirement of the said certificate. The way out in such situation for the exporter is to amend the shipping bill to claim lower rate. The exporter will have an option to file supplementary claim as per Drawback Rules at a later date once the certificate is obtained. A similar issue in respect of Cenvat credit has been examined and clarified in the past vide Instruction no. 609/159/2016-DBK dated 13.03.2014.

Secondly, it could be possible that export goods may be manufactured by using both Central Excise /Service Tax paid and CGST/IGST paid inputs and inputs services or only CGST/IGST paid inputs and inputs services. In such situation, an exporter opting to claim composite rate of duty drawback during transition period has to give specified declaration and produce certificates as stated above so that he does not claim double benefit. Exporter will have to reverse the ITC if any availed and also ensure that he does not claim refund of ITC/IGST. Requisite certificate from GST officer shall also be required to this effect. As mentioned earlier, exporters will also have option of claiming credit/refund of CGST/IGST and claim Customs rate drawback.

 

XIII. Refund of IGST paid on exports and Export under Bond scheme:

Under GST regime exports would be considered as zero-rated supply. Any person making zero rated supply (i.e. any exporter) shall be eligible to claim refund under either of the following options, namely: ––

(a) he may supply goods or services or both under bond or Letter of Undertaking, subject to such conditions, safeguards and procedure as may be prescribed, without payment of integrated tax and claim refund of unutilised input tax credit; or

(b) he may supply goods or services or both, subject to such conditions, safeguards and procedure as may be prescribed, on payment of integrated tax and claim refund of such tax paid on goods or services or both supplied, in accordance with the provisions of section 54 (Refunds) of the Central Goods and Services Tax Act or the rules made there under (i.e Refund Rules 2017).

For the option (a), procedure to file refund has been outlined in the Refund Rules under GST. The exporter claiming refund of IGST will file an application electronically through the Common Portal, either directly or through a Facilitation Centre notified by the GST Commissioner. The application shall be accompanied by documentary evidences as prescribed in the said rules. Application for refund shall be filed only after the export manifest or an export report, as the case may be, is delivered under section 41 of the Customs Act, 1962 in respect of such goods.

For the option (b), the shipping bill filed by an exporter shall be deemed to be an application for refund of integrated tax paid on the goods exported out of India and such application shall be deemed to have been filed only when the person in charge of the conveyance carrying the export goods duly files an export manifest or an export report covering the number and the date of shipping bills or bills of export and the applicant has furnished a valid return.

For both option (a) and (b) exporters have to provide details of GST invoice in the Shipping bill.

ARE-1 which is being submitted presently shall be dispensed with except in respect of commodities to which provisions of Central Excise Act would continue to be applicable.

XIV. Change in export Procedures:

Electronic as well as manual Shipping Bill formats including Courier Shipping Bill are being amended to include GSTIN and IGST related information so as to ensure that the export benefits like refund of IGST paid as well as accumulated input tax credit can be processed seamlessly. For the benefit of the trade, modified Forms have been hosted on the departmental website, http://www.cbec.gov.in. Further, suitable notifications shall be issued to amend the relevant regulations and introduce modified Forms.

 

  1. Export under factory stuffing procedures:

In the context of GST, taking into account the obligation of filing GSTR1 and GSTR2 by exporters who are registered under GST, Board intends to simplify the procedure relating to factory stuffing hitherto carried out under the supervision of Central Excise officers. It is the endeavour of the Board to create a trust based environment where compliance in accordance with the extant laws is ensured by strengthening Risk Management System and Intelligence mechanism of the department. Suitable circular in this regard would be issued. Until then the extant instructions on the issue may be followed.

Note: The above guidance note should not be used in any quasi-judicial or judicial proceedings, where only the relevant legal texts need to be referred to.

 

ANNEXURE-I

Case 1.-Where product attracts IGST but not CVD

Suppose Assessable Value (A.V.) including landing charges =Rs. 100/-

(1) BCD- 10%

(2) IGST-12%

(3) Education cess – 2%

(4) Higher education cess -1%

In view of the above parameters, the calculation of duty would be as below:

(a) BCD = Rs. 10 [10% of A.V.]

(b) Education cess- Rs. 0.2 [2% of (a)]

(c) Higher education cess- Rs. 0.1 [1% of (a)]

(d) IGST- Rs. 13.236 [A.V.+(a) +(b) +(c)]x12%

 

Case 2. Where product does not attract CVD but attract IGST as well as compensation cess

Suppose Assessable Value (A.V.) including landing charges =Rs. 100/-

(1) BCD- 10%

(2) IGST-12%

(3) Education cess – 2%

(4) Higher education cess -1%

(5) Compensation cess- 10%

In view of the above parameters, the calculation of duty would be as below:

(a) BCD = Rs. 10 [10% of A.V.]

(b) Education cess- Rs. 0.2 [2% of (a)]

(c) Higher education cess- Rs. 0.1 [1% of (a)]

(d) IGST- Rs.13.236 [A.V.+(a)+(b)+(c)]x12%

(e) Compensation cess- Rs. 11.03 [A.V.+(a)+(b)+(c)]x 10%

Case 3. Where product attract both CVD & IGST:

Suppose Assessable Value (A.V.) including landing charges =Rs. 100/-

(1) BCD- 10%

(2) CVD- 12%

(3) IGST-28 %

(4) Education cess – 2%

(5) Higher education cess -1%

In view of the above parameters, the calculation of duty would be as below:

(a) BCD = Rs. 10 [10% of A.V.]

(b) CVD = Rs 13.2 [ 12% of (A.V.+ BCD)

(c) Education cess- Rs. 0.464 [2% of (BCD+CVD)]

(d) Higher education cess- Rs. 0.232 [1% of (BCD+CVD)]

(e) IGST- Rs. 34.69 [A.V.+(a)+(b)+(c)+(d)]x 28%

Case 4. Where product attract CVD, IGST& Compensation cess:

Suppose Assessable Value (A.V.) including landing charges =Rs. 100/-

(1) BCD- 10%

(2) CVD- 12%

(3) IGST-28 %

(4) Education cess – 2%

(5) Higher education cess -1%

(6) Compensation cess-10%

In view of the above parameters, the calculation of duty would be as below:

(a) BCD = Rs. 10 [10% of A.V.]

(b) CVD = Rs 13.2 [ 12% of (A.V.+ BCD)

(c) Education cess- Rs. 0.464 [2% of (BCD+CVD)]

(d) Higher education cess- Rs. 0.232 [1% of (BCD+CVD)]

(e) IGST- Rs. 34.69 [A.V.+(a)+(b)+(c)+(d)]x 28%

(f) Compensation cess – Rs. 12.389 [A.V.+(a)+(b)+(c)+(d)]x 10%

Note: In cases where imported goods are liable to Anti-Dumping Duty or Safeguard Duty, calculation of Anti-Dumping Duty or Safeguard duty would be as per the respective notification issued for levy of such duty. It is also clarified that value for calculation of IGST as well as Compensation Cess shall also include Anti-Dumping Duty amount and Safeguard duty amount.

 

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Claiming Foreign Tax Credit by Indian Corporates/Entities

 

The Central Board of Direct Taxes (CBDT) had set-up a committee to suggest the methodology for grant of Foreign Tax Credit(FTC). After due consideration of the issues raised by various stakeholders, the committee submitted its report. Subsequently, CBDT had issued draft rules for the grant FTC inviting comments and suggestions on the same.

Recently, CBDT has issued a Notification introducing new rule in the Income-tax Rules, 1962 (the Rules) with respect to FTC that shall come into effect from 1 April 2017. The specific rule and details are as under

  1. (1) An assessee, being a resident shall be allowed a credit for the amount of any foreign tax paid by him in a country or specified territory outside India, by way of deduction or otherwise, in the year in which the income corresponding to such tax has been offered to tax or assessed to tax in India, in the manner and to the extent as specified in this rule :

Provided that in a case where income on which foreign tax has been paid or deducted, is offered to tax in more than one year, credit of foreign tax shall be allowed across those years in the same proportion in which the income is offered to tax or assessed to tax in India.

(2) The foreign tax referred to in sub-rule (1) shall mean,—

(a)                  in respect of a country or specified territory outside India with which India has entered into an agreement for the relief or avoidance of double taxation of income in terms of section 90 or section 90A, the tax covered under the said agreement;

(b)                  in respect of any other country or specified territory outside India, the tax payable under the law in force in that country or specified territory in the nature of income-tax referred to in clause (iv) of the Explanation to section 91.

(3) The credit under sub-rule (1) shall be available against the amount of tax, surcharge and cess payable under the Act but not in respect of any sum payable by way of interest, fee or penalty.

(4) No credit under sub-rule (1) shall be available in respect of any amount of foreign tax or part thereof which is disputed in any manner by the assessee:

Provided that the credit of such disputed tax shall be allowed for the year in which such income is offered to tax or assessed to tax in India if the assessee within six months from the end of the month in which the dispute is finally settled, furnishes evidence of settlement of dispute and an evidence to the effect that the liability for payment of such foreign tax has been discharged by him and furnishes an undertaking that no refund in respect of such amount has directly or indirectly been claimed or shall be claimed.

(5) The credit of foreign tax shall be the aggregate of the amounts of credit computed separately for each source of income arising from a particular country or specified territory outside India and shall be given effect to in the following manner:—

(i)                   the credit shall be the lower of the tax payable under the Act on such income and the foreign tax paid on such income :

Provided that where the foreign tax paid exceeds the amount of tax payable in accordance with the provisions of the agreement for relief or avoidance of double taxation, such excess shall be ignored for the purposes of this clause;

(ii)                  the credit shall be determined by conversion of the currency of payment of foreign tax at the telegraphic transfer buying rate on the last day of the month immediately preceding the month in which such tax has been paid or deducted.

(6) In a case where any tax is payable under the provisions of section 115JB or section 115JC, the credit of foreign tax shall be allowed against such tax in the same manner as is allowable against any tax payable under the provisions of the Act other than the provisions of the said sections (hereafter referred to as the “normal provisions”).

(7) Where the amount of foreign tax credit available against the tax payable under the provisions of section 115JB or section 115JC exceeds the amount of tax credit available against the normal provisions, then while computing the amount of credit under section 115JAA or section 115JD in respect of the taxes paid under section 115JB or section 115JC, as the case may be, such excess shall be ignored.

(8) Credit of any foreign tax shall be allowed on furnishing the following documents by the assessee, namely:—

(i)                   a statement of income from the country or specified territory outside India offered for tax for the previous year and of foreign tax deducted or paid on such income in Form No.67 and verified in the manner specified therein;

(ii)                  certificate or statement specifying the nature of income and the amount of tax deducted therefrom or paid by the assessee,—

(a)                  from the tax authority of the country or the specified territory outside India; or

(b)                  from the person responsible for deduction of such tax; or

(c)                  signed by the assessee:

Provided that the statement furnished by the assessee in clause (c) shall be valid if it is accompanied by,—

(A)                 an acknowledgement of online payment or bank counter foil or challan for payment of tax where the payment has been made by the assessee;

(B)                 proof of deduction where the tax has been deducted.

(9) The statement in Form No.67 referred to in clause (i) of sub-rule (8) and the certificate or the statement referred to in clause (ii) of sub-rule (8) shall be furnished on or before the due date specified for furnishing the return of income under sub-section (1) of section 139, in the manner specified for furnishing such return of income.

(10) Form No.67 shall also be furnished in a case where the carry backward of loss of the current year results in refund of foreign tax for which credit has been claimed in any earlier previous year or years.

Explanation.—For the purposes of this rule ‘telegraphic transfer buying rate’ shall have

the same meaning as assigned to it in Explanation to rule 26.]

SOURCE: CBDT-GOI.

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National Certification System of India for Tissue Culture Raised Plants

Government of India established the “National Certification System for Tissue Culture Raised Plants (NCS-TCP)” authorizing Department of Biotechnology, Ministry of Science & Technology as the Certification Agency vide the Gazette Notification dated 10thMarch 2006 under the “Seeds Act, 1966” for ensuring production and distribution of quality tissue culture planting materials.

With increasing demand for agricultural, forestry, plantation and horticulture crops, the demand for high quality, high yielding, disease free planting stock has been increased significantly over the last two decades. Conventional propagation method which includes sowing of seeds, propagation by cutting, layering etc suffers from the inherent limitations in the number that can be produced, non-uniformity of quality and incidence of diseases. Plant Tissue Culture has emerged as an important biotechnology and commercially viable tool to multiply elite varieties of high quality, disease free and high yielding plants rapidly in the laboratory irrespective of the season of the year. In India the tissue culture Industry is growing at a rate of 15% per annum.

The purpose of NCS-TCP is to ensure production and distribution of quality tissue culture planting materials. NCS-TCP is a unique quality management system, first of its kind in the world which ensures recognition of Tissue Culture Production Facility for the production of quality planting material and certification of end products.

NCS-TCP has made significant impact in the last one decade of its implementation. Currently, around 80 Companies are recognized. Two Referral Centre’s and five Test Laboratories are accredited under this system. The recognized companies are eligible for getting their planting material certified from the Accredited Test Laboratories. So far, more than 275 million Tissue Culture plants have been certified through this system.


 

 

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HOW TO FILE MANUAL GST REFUND CLAIM FOR EXPORTS and SEZ SUPPLIES

 

Government of India has issued Circular No. 17/17/2017 – GST, Dated the 15th November, 2017 prescribing procedure for Manual filing and processing of refund claims in respect of zero-rated supplies under GST;

Due to the non-availability of the refund module on the common portal, it has been decided by the competent authority, on the recommendations of the Council, that the applications/documents/forms pertaining to refund claims on account of zero-rated supplies shall be filed and processed manually till further orders. Therefore, in exercise of the powers conferred by sub-section (1) of section 168 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as ‘the CGST Act’) and for the purpose of ensuring uniformity, the following conditions and procedure are laid down for the manual filing and processing of the refund claims:

2.1       As per sub-section (3) of section 16 of the Integrated Goods and Services Tax Act, 2017 (hereinafter referred to as ‘the IGST Act’) read with clause (i) of sub-section (3) and sub-section (6) of section 54 of the CGST Act and rules 89 to 96A of the Central Goods and Services Tax Rules, 2017 (hereinafter referred to as ‘the CGST Rules’), a registered person may make zero-rated supplies of goods or services or both on payment of integrated tax and claim refund of the tax so paid, or make zero-rated supplies of goods or services or both under bond or Letter of Undertaking without payment of integrated tax and claim refund of unutilized input tax credit in relation to such zero rated supplies.

2.2       The refund of integrated tax paid on goods exported out of India is governed by

rule 96 of the CGST Rules. The shipping bill filed by an exporter shall be deemed to be an application for refund in such cases. The application shall be deemed to have been filed only when export manifest or export report is filed and the applicant has furnished a valid return in FORM GSTR-3 or FORM GSTR-3B, as the case may be. Upon receipt of the information regarding furnishing of a valid return in FORM GSTR-3 or FORM GSTR-3B, as the case may be, from the common portal, the system designated by the Customs shall process the claim for refund and an amount equal to the integrated tax paid in respect of such export shall be electronically credited to the bank account of the applicant. Any order regarding withholding of such refund or its further sanction respectively in PART-B of FORM GST RFD-07 or FORM GST RFD-06 shall be done manually till the refund module is operational on the common portal.

 

2.3       The application for refund of integrated tax paid on zero-rated supply of goods to a Special Economic Zone developer or a Special Economic Zone unit or in case of zero-rated supply of services (that is, except the cases covered in paragraph 2.2 above and para 2.4 below) is required to be filed in FORM GST RFD-01A (as notified in the CGST Rules vide notification No. 55/2017 – Central Tax dated 15.11.2017) by the supplier on the common portal and a print out of the said form shall be submitted before the jurisdictional proper officer along with all necessary documentary evidences as applicable (as per the details in statement 2 or 4 of Annexure to FORM GST RFD – 01), within the time stipulated for filing of such refund under the CGST Act.

 

2.4       The application for refund of unutilized input tax credit on inputs or input services used in making such zero-rated supplies shall be filed in FORM GST RFD-01A on the common portal and the amount claimed as refund shall get debited in accordance with sub-rule (3) of rule 86 of the CGST Rules from the amount in the electronic credit ledger to the extent of the claim. The common portal shall generate a proof of debit (ARN- Acknowledgement Receipt Number) which would be mentioned in the FORM GST RFD-01A submitted manually, along with the print out of FORM GST RFD-01A to the jurisdictional proper officer, and with all necessary documentary evidences as applicable (as per details in statement 3 or 5 of Annexure to FORM GST RFD-01), within the time stipulated for filing of such refund under the CGST Act.

 

2.5       The registered person needs to file the refund claim with the jurisdictional tax authority to which the taxpayer has been assigned as per the administrative order issued in this regard by the Chief Commissioner of Central Tax and the Commissioner of State Tax. In case such an order has not been issued in the State, the registered person is at liberty to apply for refund before the Central Tax Authority or State Tax Authority till the administrative mechanism for assigning of taxpayers to respective authority is implemented. However, in the latter case, an undertaking is required to be submitted stating that the claim for sanction of refund has been made to only one of the authorities. It is reiterated that the Central Tax officers shall facilitate the processing of the refund claims of all registered persons whether or not such person was registered with the Central Government in the earlier regime.

 

2.6       Once such a refund application in FORM GST RFD-01A is received in the office of the jurisdictional proper officer, an entry shall be made in a refund register to be maintained for this purpose with the following details –

 

Table 1

Sl. No. Applicant’s name GSTIN

 

Date of receipt of application Period to which the claim pertains Nature of refund – Refund of integrated tax paid/Refund of unutilized ITC Amount of refund claimed Date of issue of acknowledgment in FORM GST RFD-02 Date of receipt of complete application (as mentioned in FORM GST RFD-02)
1 2 3 4 5 6 7 8 9

 

2.7       Further, all communication in regard to the FORMS mentioned below shall be done manually, within the timelines as specified in the relevant rules, till the module is operational on the common portal, and all such communications shall also be recorded appropriately in the refund register as discussed in the succeeding paragraphs –

 

Sl.No. FORM Details Relevant provision of the CGST Rules, 2017
1. FORM GST RFD-02 Acknowledgement Rules 90(1) and 90(2)
2. FORM GST RFD-03 Deficiency memo Rule 90(3)
3. FORM GST RFD-04 Provisional refund order Rule 91(2)
4. FORM GST RFD-05 Payment advice Rules 91(3), 92(4), 92(5) and 94
5. FORM GST RFD-06 Refund sanction/Rejection order Rules 92(1), 92(3), 92(4), 92(5) and 96(7)
6. FORM GST RFD-07 Order for complete adjustment/withholding of sanctioned refund Rules 92(1), 92(2) and 96(6)
7. FORM GST RFD-08 Notice for rejection of application for refund Rule 92(3)
8. FORM GST RFD-09 Reply to show cause notice Rule 92(3)

 

2.8       The processing of the claim till the provisional sanction of refund shall be recorded in the refund register as in the table indicated below –

 

Table 2

Date of issue of Deficiency Memo in FORM GST RFD-03 Date of receipt of reply from the applicant Date of issue of provisional refund order in FORM GST-RFD-04 Amount of refund claimed Amount of provisional refund sanctioned Date of issue of Payment Advice in FORM GST RFD-05

 

        CT ST/UTT IT Cess  
1 2 3 4 5 6 7 8 9

 

 

2.9       After the sanction of provisional refund, the claim shall be processed and the final order issued within sixty days of the date of receipt of the complete application form. The process shall be recorded in the refund register as in the table indicated below –

Table 3

Date of issue of notice, if any for rejection of refund in FORM GST RFD-08 Date of receipt of reply, if any to SCN in FORM GST RFD-09 Date of issue of Refund sanction/rejection order in FORM GST RFD-06 Total amount of refund sanctioned Date of issue of Payment Advice in FORM GST RFD-05

 

Amount of refund rejected Date of issue of order for adjustment of sanctioned  refund/ withholding refund in FORM GST RFD-07
      CT ST/UTT IT Cess   CT ST/UTT IT Cess  
1 2 3 4 5 6 7 8 9 10 11 12 13

 

2.10    After the refund claim is processed in accordance with the provisions of the CGST Act and the rules made thereunder and where any amount claimed as refund is rejected under rule 92 of the CGST Rules, either fully or partly, the amount debited, to the extent of rejection, shall be re-credited to the electronic credit ledger by an order made in FORM GST PMT-03. The amount would be credited by the proper officer using FORM GST RFD-01B (as notified in the CGST Rules vide notification No. 55/2017 – Central Tax dated 15.11.2017) subject to the provisions of rule 93 of the CGST Rules.

 

  1. For the sake of clarity and uniformity, the entire process of filing and processing of refunds manually is tabulated as below:

 

3.1 Filing of Refund Claims:

Sl. No. Category of Refund Process of Filing
1. Refund of IGST paid on export of goods No separate application is required as shipping bill itself will be treated as application for refund.
2. Refund of IGST paid on export of services / zero rated supplies to SEZ units or SEZ developers Printout of FORM GST RFD-01A needs to be filed manually with the jurisdictional GST officer (only at one place – Centre or State) along with relevant documentary evidences, wherever applicable.
3. Refund of unutilized input tax credit due to the accumulation of credit of tax paid on inputs or input services used in making zero-rated supplies of goods or services or both FORM GST RFD-01A needs to be filed on the common portal. The amount of credit claimed as refund would be debited in the electronic credit ledger and proof of debit needs to be generated on the common portal. Printout of the FORM GST RFD- 01A needs to be submitted before the jurisdictional GST officer along with necessary documentary evidences, wherever applicable.

 

3.2 Steps to be followed for processing of Refund Claims:

Three different refund registers are to be maintained for record keeping of the manually sanctioned refunds – for receipts, sanction of provisional refunds and sanction of final refunds. The steps are as follows:

 

Step No. Action to be Taken
Step-1 Entry to be made in the Refund register for receipt of refund applications
Step-2 Check for completeness of application as well as availability of the supporting documents in totality. Once completeness in all respects is ascertained, acknowledgement in FORM GST RFD-02 shall be issued within 15 days from the date of filing of the application and  entry shall be made in the Refund register for receipt of refund applications
Step-3 ·        All communications (issuance of deficiency memo, issuance of provisional and final refund orders, payment advice etc.) shall be done in the format prescribed in the Forms appended to the CGST Rules, and shall be done manually (i.e. not on the common portal) within the timelines prescribed in the rules;

·        Processing for grant of provisional refund shall be completed within 7 days as per the CGST Rules and details to be maintained in the register for provisional refunds. Bifurcation of the taxes to be refunded under CGST (CT) /SGST (ST) /UTGST (UT) /IGST (IT) /Cess shall be maintained in the register mandatorily;

·        After the sanction of the provisional refund, final order is to be issued within sixty days (after due verification of the documentary evidences) of the date of receipt of the complete application form. The details of the finally sanctioned refund and rejected portion of the refund along with the breakup (CT / ST / UT / IT/ Cess) to be maintained in the final refund register;

·        The amount not sanctioned and eligible for re-credit is to be re-credited to the electronic credit ledger by an order made in FORM GST PMT-03. The actual credit of this amount will be done by the proper officer in FORM GST RFD-01B.

 

 

3.3 Detailed procedure for manual processing of refund claims:

 

The detailed procedure for disposal of Refund claims filed manually is as under:

MANUAL PROCESSING OF REFUND
STEPS REMARKS LEGAL PROVISIONS
Filing of refund application in FORM GST RFD- 01A online on the common portal (only when refund of unutilized ITC is claimed) ·        The corresponding electronic credit ledger of CT / ST / UT / IT/ Cess would get debited and an ARN number would get generated. Rule 89
Filing of printout of FORMGST RFD-01A ·        The printout of the ARN along with application of refund shall be submitted manually in the appropriate jurisdiction.

·        This form needs to be accompanied with the requisite documentary evidences. This Form shall contain the debit entry in the electronic credit ledger of the amount claimed as refund in FORM GST RFD-01A.

Rule 89(1) – Application

 

Rule 89(2) – Requisite Documents

 

Rule 89(3) – Debiting of electronic credit ledger

Initial scrutiny of the Documents by the proper officer ·        The proper officer shall validate the GSTIN details on the portal to validate whether return in FORM GSTR-3 or FORM GSTR- 3B, as the case may be, has been filed. A declaration is required to be submitted by the claimant that no refund has been claimed against the relevant invoices.

·        Deficiencies, if any, in documentary evidences are to be ascertained and communicated in FORM GST RFD-03 within 15 days of filing of the refund application.

·        Deficiency Memo should be complete in all respects and only one Deficiency Memo shall be given.

·        Submission of application after Deficiency Memo shall be treated as a fresh application.

·        Resubmission of the application, after rectifying the deficiencies pointed out in the Deficiency memo, shall be made by using the ARN and debit entry number generated originally.

·        If the application is not filed afresh within  thirty days of the communication of the deficiency memo, the proper officer shall pass an order in FORM GST PMT-03 and re-credit the amount claimed as refund through FORM GST RFD-01B.

Rule 90(2) – 15 day time for scrutiny

Rule 90(3) – Issuance of Deficiency memo

Rule 90(3) – Fresh refund application requirement

Rule 93(1) – re-credit of refund amount applied for

 

 

Issue acknowledgement manually within 15 days in FORM GST RFD-02 ·        The date of submission of application for which acknowledgement has been given will be considered as the date for ensuring whether the refund application has been sanctioned within the stipulated time period. Rule 90(2) – Acknowledgement
Grant of provisional refund within seven days of issue of acknowledgement ·        The amount of provisional refund shall be calculated taking into account the total input tax credit, without making any reduction for credit being provisionally accepted.

·        Provisional refund shall be granted separately for each head CT / ST / UT / IT/ Cess within 7 days of acknowledgement in FORM GST RFD-04.

·        Before sanction of the refund a declaration shall be obtained that the applicant has not contravened rule 91(1).

·        Payment advice to be issued in FORM GST RFD-05.

·        Refund would be made directly in the bank account mentioned in the registration.

Rule 91(1) – Requirement of no prosecution for last 5 years

 

Rule 91(2) – Prima facie satisfaction, seven day requirement

 

Rule 91(3) – Payment advice, electronic credit to bank account

Detailed scrutiny of the refund application along with submitted documents ·        The officer shall validate refund statement details with details in FORM GSTR 1 (or Table 6A of FORM GSTR-1) available on the common portal.

·        The Shipping bill details shall be checked by officer through ICEGATE SITE (www.icegate.gov.in) wherein the officer would be able to check details of EGM and shipping bill by keying in port name, Shipping bill number and date.

·        Further, details of IGST paid also needs to be verified from FORM GSTR- 3 or FORM GSTR- 3B, as the case may be, filed by the applicant and it needs to be verified that the refund amount claimed shall be less than the tax paid on account of zero rated supplies as per FORM GSTR-3 or FORM GSTR- 3B, as the case may be.

·        Ascertain what amount may be sanctioned finally and see whether any adjustments against any outstanding liability is required (FORM GST RFD-07 – Part A).

·        Ascertain what amount of the input tax credit is sanction-able, and amount of refund, if any, liable to be withheld.

·        Order needs to be passed in FORM GST RFD-07 – Part B.

Rule 89(4) – Refund Amount Calculation

 

Rule 92(1) – Any adjustments made in the amount against existing demands

 

Rule 92(2) – reasons for withholding of refunds

If the sanction-able amount is less than the applied amount ·        Notice has to be issued to the applicant in FORM GST RFD-08.

·        The applicant has to reply within 15 days of receipt of the notice in FORM GST RFD-09.

·        Principles of natural justice to be followed before making the final decision.

·        Final order to be made in FORM GST RFD-06.

Rule 92(3) – Notice for refund not admissible / payable

 

Rule 92(3) – Requirement of reply to the notice within 15 days

 

Rule 92(3), 92(4), 92(5) – Sanction of Refund order

Pre-Audit ·        Pre-audit of the manually processed refund applications is not required to be carried out, irrespective of the amount involved, till separate detailed guidelines are issued.

·        Post-audit of the orders may however continue on the basis of extant guidelines.

 
Final sanction of refund ·        The proper officer shall issue the refund order manually for each head i.e. CT / ST / UT / IT/ Cess.

·        Amount paid provisionally needs to be adjusted accordingly.

·        Payment advice is to be made in FORM GST RFD-05.

·        The amount of credit rejected has to be re-credited to the credit ledger by an order in FORM GST PMT- 03 and shall be intimated to the common portal in FORM GST RFD- 01B.

·        Refund, if any, will be paid by an order with payment advice in FORM GST RFD-05.

·        The details of the refund along with taxpayer bank account details shall be manually submitted in PFMS/[States’] system by the jurisdictional Division’s DDO and a signed copy of the sanction order shall be sent to PAO office for release of payment.

Rule 92(3), 92(4), 92(5) – Sanction of Refund order

 

Rule 92(4), 92(5) – Payment advice issue

Payment of interest if any ·        Amount, if any, will be paid by an order with payment advice in FORM GST RFD-05. Rule 94

 

  1. The refund application for various taxes i.e. CT / ST / UT / IT/ Cess can be filed with any one of the tax authorities and shall be processed by the said authority, however the payment of the sanctioned refund amount shall be made only by the respective tax authority of the Centre or State government. In other words, the payment of the sanctioned refund amount in relation to CT / IT / Cess shall be made by the Central tax authority while payment of the sanctioned refund amount in relation to ST / UT would be made by the State tax/Union territory tax authority. It therefore becomes necessary that the refund order issued either by the Central tax authority or the State tax/UT tax authority is communicated to the concerned counter-part tax authority within three days for the purpose of payment of the relevant sanctioned refund amount of tax or cess, as the case may be.

 

 

HOW TO FILE MANUAL GST REFUND CLAIM FOR EXPORTS

 

Government of India has issued Circular No. 17/17/2017 – GST, Dated the 15th November, 2017 prescribing procedure for Manual filing and processing of refund claims in respect of zero-rated supplies under GST;

Due to the non-availability of the refund module on the common portal, it has been decided by the competent authority, on the recommendations of the Council, that the applications/documents/forms pertaining to refund claims on account of zero-rated supplies shall be filed and processed manually till further orders. Therefore, in exercise of the powers conferred by sub-section (1) of section 168 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as ‘the CGST Act’) and for the purpose of ensuring uniformity, the following conditions and procedure are laid down for the manual filing and processing of the refund claims:

2.1       As per sub-section (3) of section 16 of the Integrated Goods and Services Tax Act, 2017 (hereinafter referred to as ‘the IGST Act’) read with clause (i) of sub-section (3) and sub-section (6) of section 54 of the CGST Act and rules 89 to 96A of the Central Goods and Services Tax Rules, 2017 (hereinafter referred to as ‘the CGST Rules’), a registered person may make zero-rated supplies of goods or services or both on payment of integrated tax and claim refund of the tax so paid, or make zero-rated supplies of goods or services or both under bond or Letter of Undertaking without payment of integrated tax and claim refund of unutilized input tax credit in relation to such zero rated supplies.

2.2       The refund of integrated tax paid on goods exported out of India is governed by

rule 96 of the CGST Rules. The shipping bill filed by an exporter shall be deemed to be an application for refund in such cases. The application shall be deemed to have been filed only when export manifest or export report is filed and the applicant has furnished a valid return in FORM GSTR-3 or FORM GSTR-3B, as the case may be. Upon receipt of the information regarding furnishing of a valid return in FORM GSTR-3 or FORM GSTR-3B, as the case may be, from the common portal, the system designated by the Customs shall process the claim for refund and an amount equal to the integrated tax paid in respect of such export shall be electronically credited to the bank account of the applicant. Any order regarding withholding of such refund or its further sanction respectively in PART-B of FORM GST RFD-07 or FORM GST RFD-06 shall be done manually till the refund module is operational on the common portal.

 

2.3       The application for refund of integrated tax paid on zero-rated supply of goods to a Special Economic Zone developer or a Special Economic Zone unit or in case of zero-rated supply of services (that is, except the cases covered in paragraph 2.2 above and para 2.4 below) is required to be filed in FORM GST RFD-01A (as notified in the CGST Rules vide notification No. 55/2017 – Central Tax dated 15.11.2017) by the supplier on the common portal and a print out of the said form shall be submitted before the jurisdictional proper officer along with all necessary documentary evidences as applicable (as per the details in statement 2 or 4 of Annexure to FORM GST RFD – 01), within the time stipulated for filing of such refund under the CGST Act.

 

2.4       The application for refund of unutilized input tax credit on inputs or input services used in making such zero-rated supplies shall be filed in FORM GST RFD-01A on the common portal and the amount claimed as refund shall get debited in accordance with sub-rule (3) of rule 86 of the CGST Rules from the amount in the electronic credit ledger to the extent of the claim. The common portal shall generate a proof of debit (ARN- Acknowledgement Receipt Number) which would be mentioned in the FORM GST RFD-01A submitted manually, along with the print out of FORM GST RFD-01A to the jurisdictional proper officer, and with all necessary documentary evidences as applicable (as per details in statement 3 or 5 of Annexure to FORM GST RFD-01), within the time stipulated for filing of such refund under the CGST Act.

 

2.5       The registered person needs to file the refund claim with the jurisdictional tax authority to which the taxpayer has been assigned as per the administrative order issued in this regard by the Chief Commissioner of Central Tax and the Commissioner of State Tax. In case such an order has not been issued in the State, the registered person is at liberty to apply for refund before the Central Tax Authority or State Tax Authority till the administrative mechanism for assigning of taxpayers to respective authority is implemented. However, in the latter case, an undertaking is required to be submitted stating that the claim for sanction of refund has been made to only one of the authorities. It is reiterated that the Central Tax officers shall facilitate the processing of the refund claims of all registered persons whether or not such person was registered with the Central Government in the earlier regime.

 

2.6       Once such a refund application in FORM GST RFD-01A is received in the office of the jurisdictional proper officer, an entry shall be made in a refund register to be maintained for this purpose with the following details –

 

Table 1

Sl. No. Applicant’s name GSTIN

 

Date of receipt of application Period to which the claim pertains Nature of refund – Refund of integrated tax paid/Refund of unutilized ITC Amount of refund claimed Date of issue of acknowledgment in FORM GST RFD-02 Date of receipt of complete application (as mentioned in FORM GST RFD-02)
1 2 3 4 5 6 7 8 9

 

2.7       Further, all communication in regard to the FORMS mentioned below shall be done manually, within the timelines as specified in the relevant rules, till the module is operational on the common portal, and all such communications shall also be recorded appropriately in the refund register as discussed in the succeeding paragraphs –

 

Sl.No. FORM Details Relevant provision of the CGST Rules, 2017
1. FORM GST RFD-02 Acknowledgement Rules 90(1) and 90(2)
2. FORM GST RFD-03 Deficiency memo Rule 90(3)
3. FORM GST RFD-04 Provisional refund order Rule 91(2)
4. FORM GST RFD-05 Payment advice Rules 91(3), 92(4), 92(5) and 94
5. FORM GST RFD-06 Refund sanction/Rejection order Rules 92(1), 92(3), 92(4), 92(5) and 96(7)
6. FORM GST RFD-07 Order for complete adjustment/withholding of sanctioned refund Rules 92(1), 92(2) and 96(6)
7. FORM GST RFD-08 Notice for rejection of application for refund Rule 92(3)
8. FORM GST RFD-09 Reply to show cause notice Rule 92(3)

 

2.8       The processing of the claim till the provisional sanction of refund shall be recorded in the refund register as in the table indicated below –

 

Table 2

Date of issue of Deficiency Memo in FORM GST RFD-03 Date of receipt of reply from the applicant Date of issue of provisional refund order in FORM GST-RFD-04 Amount of refund claimed Amount of provisional refund sanctioned Date of issue of Payment Advice in FORM GST RFD-05

 

        CT ST/UTT IT Cess  
1 2 3 4 5 6 7 8 9

 

 

2.9       After the sanction of provisional refund, the claim shall be processed and the final order issued within sixty days of the date of receipt of the complete application form. The process shall be recorded in the refund register as in the table indicated below –

Table 3

Date of issue of notice, if any for rejection of refund in FORM GST RFD-08 Date of receipt of reply, if any to SCN in FORM GST RFD-09 Date of issue of Refund sanction/rejection order in FORM GST RFD-06 Total amount of refund sanctioned Date of issue of Payment Advice in FORM GST RFD-05

 

Amount of refund rejected Date of issue of order for adjustment of sanctioned  refund/ withholding refund in FORM GST RFD-07
      CT ST/UTT IT Cess   CT ST/UTT IT Cess  
1 2 3 4 5 6 7 8 9 10 11 12 13

 

2.10    After the refund claim is processed in accordance with the provisions of the CGST Act and the rules made thereunder and where any amount claimed as refund is rejected under rule 92 of the CGST Rules, either fully or partly, the amount debited, to the extent of rejection, shall be re-credited to the electronic credit ledger by an order made in FORM GST PMT-03. The amount would be credited by the proper officer using FORM GST RFD-01B (as notified in the CGST Rules vide notification No. 55/2017 – Central Tax dated 15.11.2017) subject to the provisions of rule 93 of the CGST Rules.

 

  1. For the sake of clarity and uniformity, the entire process of filing and processing of refunds manually is tabulated as below:

 

3.1 Filing of Refund Claims:

Sl. No. Category of Refund Process of Filing
1. Refund of IGST paid on export of goods No separate application is required as shipping bill itself will be treated as application for refund.
2. Refund of IGST paid on export of services / zero rated supplies to SEZ units or SEZ developers Printout of FORM GST RFD-01A needs to be filed manually with the jurisdictional GST officer (only at one place – Centre or State) along with relevant documentary evidences, wherever applicable.
3. Refund of unutilized input tax credit due to the accumulation of credit of tax paid on inputs or input services used in making zero-rated supplies of goods or services or both FORM GST RFD-01A needs to be filed on the common portal. The amount of credit claimed as refund would be debited in the electronic credit ledger and proof of debit needs to be generated on the common portal. Printout of the FORM GST RFD- 01A needs to be submitted before the jurisdictional GST officer along with necessary documentary evidences, wherever applicable.

 

3.2 Steps to be followed for processing of Refund Claims:

Three different refund registers are to be maintained for record keeping of the manually sanctioned refunds – for receipts, sanction of provisional refunds and sanction of final refunds. The steps are as follows:

 

Step No. Action to be Taken
Step-1 Entry to be made in the Refund register for receipt of refund applications
Step-2 Check for completeness of application as well as availability of the supporting documents in totality. Once completeness in all respects is ascertained, acknowledgement in FORM GST RFD-02 shall be issued within 15 days from the date of filing of the application and  entry shall be made in the Refund register for receipt of refund applications
Step-3 ·        All communications (issuance of deficiency memo, issuance of provisional and final refund orders, payment advice etc.) shall be done in the format prescribed in the Forms appended to the CGST Rules, and shall be done manually (i.e. not on the common portal) within the timelines prescribed in the rules;

·        Processing for grant of provisional refund shall be completed within 7 days as per the CGST Rules and details to be maintained in the register for provisional refunds. Bifurcation of the taxes to be refunded under CGST (CT) /SGST (ST) /UTGST (UT) /IGST (IT) /Cess shall be maintained in the register mandatorily;

·        After the sanction of the provisional refund, final order is to be issued within sixty days (after due verification of the documentary evidences) of the date of receipt of the complete application form. The details of the finally sanctioned refund and rejected portion of the refund along with the breakup (CT / ST / UT / IT/ Cess) to be maintained in the final refund register;

·        The amount not sanctioned and eligible for re-credit is to be re-credited to the electronic credit ledger by an order made in FORM GST PMT-03. The actual credit of this amount will be done by the proper officer in FORM GST RFD-01B.

 

 

3.3 Detailed procedure for manual processing of refund claims:

 

The detailed procedure for disposal of Refund claims filed manually is as under:

MANUAL PROCESSING OF REFUND
STEPS REMARKS LEGAL PROVISIONS
Filing of refund application in FORM GST RFD- 01A online on the common portal (only when refund of unutilized ITC is claimed) ·        The corresponding electronic credit ledger of CT / ST / UT / IT/ Cess would get debited and an ARN number would get generated. Rule 89
Filing of printout of FORMGST RFD-01A ·        The printout of the ARN along with application of refund shall be submitted manually in the appropriate jurisdiction.

·        This form needs to be accompanied with the requisite documentary evidences. This Form shall contain the debit entry in the electronic credit ledger of the amount claimed as refund in FORM GST RFD-01A.

Rule 89(1) – Application

 

Rule 89(2) – Requisite Documents

 

Rule 89(3) – Debiting of electronic credit ledger

Initial scrutiny of the Documents by the proper officer ·        The proper officer shall validate the GSTIN details on the portal to validate whether return in FORM GSTR-3 or FORM GSTR- 3B, as the case may be, has been filed. A declaration is required to be submitted by the claimant that no refund has been claimed against the relevant invoices.

·        Deficiencies, if any, in documentary evidences are to be ascertained and communicated in FORM GST RFD-03 within 15 days of filing of the refund application.

·        Deficiency Memo should be complete in all respects and only one Deficiency Memo shall be given.

·        Submission of application after Deficiency Memo shall be treated as a fresh application.

·        Resubmission of the application, after rectifying the deficiencies pointed out in the Deficiency memo, shall be made by using the ARN and debit entry number generated originally.

·        If the application is not filed afresh within  thirty days of the communication of the deficiency memo, the proper officer shall pass an order in FORM GST PMT-03 and re-credit the amount claimed as refund through FORM GST RFD-01B.

Rule 90(2) – 15 day time for scrutiny

Rule 90(3) – Issuance of Deficiency memo

Rule 90(3) – Fresh refund application requirement

Rule 93(1) – re-credit of refund amount applied for

 

 

Issue acknowledgement manually within 15 days in FORM GST RFD-02 ·        The date of submission of application for which acknowledgement has been given will be considered as the date for ensuring whether the refund application has been sanctioned within the stipulated time period. Rule 90(2) – Acknowledgement
Grant of provisional refund within seven days of issue of acknowledgement ·        The amount of provisional refund shall be calculated taking into account the total input tax credit, without making any reduction for credit being provisionally accepted.

·        Provisional refund shall be granted separately for each head CT / ST / UT / IT/ Cess within 7 days of acknowledgement in FORM GST RFD-04.

·        Before sanction of the refund a declaration shall be obtained that the applicant has not contravened rule 91(1).

·        Payment advice to be issued in FORM GST RFD-05.

·        Refund would be made directly in the bank account mentioned in the registration.

Rule 91(1) – Requirement of no prosecution for last 5 years

 

Rule 91(2) – Prima facie satisfaction, seven day requirement

 

Rule 91(3) – Payment advice, electronic credit to bank account

Detailed scrutiny of the refund application along with submitted documents ·        The officer shall validate refund statement details with details in FORM GSTR 1 (or Table 6A of FORM GSTR-1) available on the common portal.

·        The Shipping bill details shall be checked by officer through ICEGATE SITE (www.icegate.gov.in) wherein the officer would be able to check details of EGM and shipping bill by keying in port name, Shipping bill number and date.

·        Further, details of IGST paid also needs to be verified from FORM GSTR- 3 or FORM GSTR- 3B, as the case may be, filed by the applicant and it needs to be verified that the refund amount claimed shall be less than the tax paid on account of zero rated supplies as per FORM GSTR-3 or FORM GSTR- 3B, as the case may be.

·        Ascertain what amount may be sanctioned finally and see whether any adjustments against any outstanding liability is required (FORM GST RFD-07 – Part A).

·        Ascertain what amount of the input tax credit is sanction-able, and amount of refund, if any, liable to be withheld.

·        Order needs to be passed in FORM GST RFD-07 – Part B.

Rule 89(4) – Refund Amount Calculation

 

Rule 92(1) – Any adjustments made in the amount against existing demands

 

Rule 92(2) – reasons for withholding of refunds

If the sanction-able amount is less than the applied amount ·        Notice has to be issued to the applicant in FORM GST RFD-08.

·        The applicant has to reply within 15 days of receipt of the notice in FORM GST RFD-09.

·        Principles of natural justice to be followed before making the final decision.

·        Final order to be made in FORM GST RFD-06.

Rule 92(3) – Notice for refund not admissible / payable

 

Rule 92(3) – Requirement of reply to the notice within 15 days

 

Rule 92(3), 92(4), 92(5) – Sanction of Refund order

Pre-Audit ·        Pre-audit of the manually processed refund applications is not required to be carried out, irrespective of the amount involved, till separate detailed guidelines are issued.

·        Post-audit of the orders may however continue on the basis of extant guidelines.

 
Final sanction of refund ·        The proper officer shall issue the refund order manually for each head i.e. CT / ST / UT / IT/ Cess.

·        Amount paid provisionally needs to be adjusted accordingly.

·        Payment advice is to be made in FORM GST RFD-05.

·        The amount of credit rejected has to be re-credited to the credit ledger by an order in FORM GST PMT- 03 and shall be intimated to the common portal in FORM GST RFD- 01B.

·        Refund, if any, will be paid by an order with payment advice in FORM GST RFD-05.

·        The details of the refund along with taxpayer bank account details shall be manually submitted in PFMS/[States’] system by the jurisdictional Division’s DDO and a signed copy of the sanction order shall be sent to PAO office for release of payment.

Rule 92(3), 92(4), 92(5) – Sanction of Refund order

 

Rule 92(4), 92(5) – Payment advice issue

Payment of interest if any ·        Amount, if any, will be paid by an order with payment advice in FORM GST RFD-05. Rule 94

 

  1. The refund application for various taxes i.e. CT / ST / UT / IT/ Cess can be filed with any one of the tax authorities and shall be processed by the said authority, however the payment of the sanctioned refund amount shall be made only by the respective tax authority of the Centre or State government. In other words, the payment of the sanctioned refund amount in relation to CT / IT / Cess shall be made by the Central tax authority while payment of the sanctioned refund amount in relation to ST / UT would be made by the State tax/Union territory tax authority. It therefore becomes necessary that the refund order issued either by the Central tax authority or the State tax/UT tax authority is communicated to the concerned counter-part tax authority within three days for the purpose of payment of the relevant sanctioned refund amount of tax or cess, as the case may be.

SOURCE:CBEC

 

 

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OPPORTUNITIES FOR EXPORTING BRAKES AND BRAKES PART TO EU

Brakes and brake parts for tractors, motor cars and other motor vehicles are – and will likely continue to be – a growing market in Europe. Every year, Europe imports more brakes and brake parts from developing countries, creating an opportunity for the export of good-quality and competitively priced products. There are opportunities both in the Original Equipment Manufacturers (OEM) market and in the aftermarket, where parts such as brake callipers, brake mountings, brake discs, brake drums, brake parts and brake shoes are in demand.
Brake systems are grouped under “Brakes and brake linings” (Harmonised System (HS) codes 87083010; 87083091; 87083099).
Braking systems consist of the following materials:
• brake pads: organic fibres, ceramic compounds, copper fibres, cellulose, glass and steel;
• brake disks: cast iron, grey iron, ceramics and carbon fibre;
• brake callipers: aluminium or steel.

On a global level, the market for brakes and brake parts has grown in recent years. The forecast is also positive; the global brake market is projected to grow at a Compound Annual Growth Rate (CAGR) of 4.7% from 2016 to 2021, partly due to the increasing number of vehicles. With a total export value of €23.0 billion in 2015, Europe is a net exporter of brakes and brake linings. This position makes the EU an excellent market for part or material suppliers from developing countries.
The automotive industry within the European Union is still recovering from the global crisis. From 2010, the market has been growing again and the expectations for the coming years are positive.
In 2015, the total value of brakes and their parts imported to the EU was €11.3 billion. The import of brakes and their parts has increased at a CAGR of 3.7% since 2011. This figure reflects a positive growth over the past four years.

The share of the imports from developing countries was 10.6% of the total import in 2015. These imports have had a CAGR of 9.1% since 2011. There are several reasons for this growth. One reason is that some major producers of brakes have outsourced part of their production to developing countries, characterised by lower wages. Another reason is EU policy that stimulates trade with developing countries with the aim of putting trade at the service of inclusive growth and sustainable development. Examples of this stimulus policy are trade agreements with several developing countries.
Having one of the most important automotive industries in the world, Germany is the largest importer of brakes in the EU with imports valued at €3.1 billion in 2015. Germany is followed by France and the United Kingdom (€1.2 billion and €1.1 billion, respectively). These high import values can be partially explained by the presence of large manufacturers of brakes and brake parts such as TRW (recently acquired by ZF Friedrichshafen), Continental and Brembo.
The largest importers of brakes from developing countries in the EU are Germany (€299 million), the United Kingdom (€223 million), Italy (€161 million), Spain (€83 million), the Netherlands (€83 million), Poland (€64 million), France (€45 million) and the Czech Republic (€40 million). Of these countries, the Netherlands and Spain had a CAGR of 30.8% and 22.2%, respectively – the highest growth in import value from developing countries. Despite a lower import value than Germany, the Netherlands and Spain therefore offer an interesting opportunity because of their increasing demand for brakes from developing countries. Other focus countries that have seen an increase in import from developing countries are Hungary (82.4% CAGR) and Slovenia (38.6%). In spite of their lower import value (€17 million and €23 million, respectively), these countries may offer interesting opportunities as well.
The United Kingdom and Italy are not only interesting because of their high import value but also because of the relatively high share devoted to developing countries (20.2% and 20.9% of the total import value, respectively). With a share of 35.7% import value from developing countries, the Netherlands offers the highest willingness to source from Important suppliers of brakes
The export of vehicle brakes and their parts from developing countries is almost entirely dominated by China (€772 million in 2015). Other important suppliers are Turkey (€139 million) and India (€117 million). All these countries have relative low wages combined with a good infrastructure. Of these countries, China has seen the largest growth of its export to the EU (12.1% CAGR since 2011). India has seen an export growth of 4.1%.

Source : www. cbi.eu

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INTEGRITY INDEX OF ORGANISATIONS

In line with the broader strategy and emphasis on preventive vigilance, the Central Vigilance Commission (CVC) has decided to go in for development of the Integrity Index-based on bench-marking of internal processes and controls within an organisation as well as management of relationships and expectations of outside stakeholders.

The Integrity Index will bring out annual scores/rankings of Public Sector Undertakings/Public Sector Banks and Financial Institutions/Departments/Ministries of Government of India by linking the essential drivers of vigilance with long term efficiency, profitability and sustainability of public organizations and create an internal and external ecosystem that promotes working with Integrity in public organizations.

CVC has adopted a research-based approach for creating an integrity index that various organizations can use to measure themselves and which will evolve with changing needs and with this view IIM-Ahmedabad has been engaged to develop the Integrity Index. Being a new initiative, initially 25 organizations have been selected for development of the Integrity Index (as per list attached). Subsequently, it is proposed to extend the Integrity Index concept to all other CPSUs and organizations of Government of India. The management of all 25 organizations have been involved in the development of Integrity Index.

The main objectives for which the Integrity Index is to be established are:

  1. Define what constitutes Integrity of Public Organizations
  2. Identify the different factors of Integrity and their inter-linkages
  3. Create an objective and reliable tool that can measure the performance of organizations along these above factors
  4. Validate the findings over a period of time to improve upon the robustness of the tool that measures Integrity
  5. Create an internal and external ecosystem that promotes working with Integrity where public organizations lead the way.

List of 25 Selected Organizations for Development of Integrity Index

Name of CPSE/Ministry/PSB etc
Oil and Gas
IOCL
ONGC
Power
NTPC
PGCIL
Coal
Eastern Coalfields
Western Coalfields
Steel
SAIL
Banks
PNB
Syndicate Bank
Transport
NHAI
Mumbai Port Trust
RVNL
M/o Railways
Mining
NMDC
NALCO
Defence
BEL
Dept of Heavy Industry
BHEL
Commerce and Textiles
CCI
Social Sector
FCI

EPFO
MCI
Communication
MTNL
Urban Development & Local bodies
DDA and South MCD
Financial Sector
CBDT

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