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IMPACT OF GST ON EXPORT FECILITATION SCHEMES

Since the current Central Excise Duties, Service Tax, CST, VAT etc are being abolished, a
new package of GST is presented. The GST Tariff has been announced and published in
line with HSN Classification Chapter 1 to 98 for supply of Goods. A new Chapter 99 has
been added to accommodate all categories of Services.

Consequently, the current Central Excise Duties, Service Tax, CST, VAT etc are being
replaced by a set of four rates of GST namely 5%; 12%; 18%; 28%. Goods with different
HSN carry different rates.

In case of imports, the existing Basic Customs Duty will remain unchanged. However,
the Additional Duty element, including Special Additional Duty, have been abolished and
in their place, IGST will be charged. IGST (Integrated GST) is now the same as GST Tariff.

It has been agreed by Central and State Government that the ratio of sharing the GST
will be 50 : 50. Therefore in a case where the specified GST is 28%, the CGST will be 14%
and the SGST will also be 14%. Therefore, if an imported item is classified as an HSN
having 28% GST, the Integrated GST will be the total of CGST and SGST i.e. (14 + 14 =
28%). The IGST so paid is eligible for Input Credit subject to the Input Credit Rules. This
credit can be either utilised for discharging the liability of output Tax on goods and
services or can be claimed as refund after effecting the exports. Duty Credit, in
proportion to the input contained in the export product, will be refunded.

When goods are supplied to an outside State or imported, the levy will be IGST.

When goods are supplied within the State, the levy will be CGST + SGST.

Therefore,

For Advance Authorisation, EPCG and EOU the Additional Duty element (now exempt)
will be payable as IGST. This will have considerable impact on the working capital
requirements of the Units.
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SEZ exemptions remain unchanged. Supplies to and from SEZ and imports to SEZ, attract
IGST. Supplies to SEZ and their imports are zero rated under IGST.

The Drawback Schedule will also stand revised in view of the current changes.

Chapter 3 benefits under the Foreign Trade Policy is expected to continue. A greater
clarity will be available when the Amendment to the Policy is announced.

A note on High Sea Sales is enclosed.

A number of amendments from DGFT and Department of Revenue are expected to

dovetail the existing system in to the new GST Regime.

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