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Are there any special provisions for Exporters?
Yes. As in the previous Acts, there is no tax on exports out of India. This is called ‘zero-rating’ where the tax payable on exports is zero.
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Are EOU units and those in SEZ treated specially?
According to the white Paper, taxes on purchases by these units are either exempted or are refunded within 3 months.
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What happens to tax paid on purchases by Exporters?
The tax paid on purchases is reduced from the output tax payable (ie., zero) and the balance is refundable.
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What is the time frame provided for refunds?
The White paper has stated that refunds shall be issued within 3 months from the date of filing the returns for the tax period. Most States have adhered to this view.
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What happens to penultimate sales?
Most State Acts have not dealt with the issue, giving one the impression that the Form H prescribed under CST Act will continue to be in force. However in
STATE-WISE ANALYSIS:
WHITE PAPER: TREATMENT OF EXPORTS, ETC.
2.5. For all exports made out of the country, tax paid within the State will be refunded in full, and this refund will be made within three months. Units located in SEZ and EOU will be granted either exemption from payment of input tax or refund of the input tax paid within three months.
Carrying Over of Tax Credit
2.4 If the tax credit exceeds the tax payable on sales in a month, the excess credit will be carried over to the end of next financial year. If there is any excess unadjusted input tax credit at the end of second year, then the same will be eligible for refund.
DELHI [SEC 11, 38, Rule 34]
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Where the Input tax exceeds the Ouput tax payable, the same shall first be adjusted against the CST payable.
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The dealer may claim the remaining excess amount of refund and the same shall be processed u/s 38 and 39.
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At the election of the dealer, the refund shall be issued within one month from the date of filing the return or claim, or in the alternative, shall be carried forward to the next tax period as tax credit.
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The dealer may have to give adequate security within 15 days of the claim
MAHARASHTRA [ SEC 8, 51]
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Sale of goods by a unit in a SEZ to another such unit, or between two EOUs is exempt from tax under the Act.
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Input Taxes paid by an exporter or a dealer who sells to an EOU or any unit within a SEZ is refundable within a period of 90 days from date of filing the return for the period.
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Refund claims from dealer selling locally will be processed at the end of the year and will be issued as a single refund order for all the tax periods comprising the financial year. A duration of 6 months is provided for issue of such refunds.
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Refund arising to a dealer who files a return evidencing the refund, shall be granted provisionally subject to obtaining Bank guarantee. Assessment in such cases will be taken up as early as feasible to determine the final refund or dues.
WEST BENGAL [SEC 16, 61, RULES 76]
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Exports by DTA units, EOU units, SEZ units, sales between EOUs, units of SEZ, and sale by units in DTA to EOU or SEZ are excluded from taxable turnover and are Zero-rated.
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Application for Refund is required to be made not less than once in 3 months.
PUNJAB [17,84]
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Goods exported outside India or supplied in the course of exports are Zero-rated and no output tax can be collected.
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As per Sec 84, penultimate sales to exporter is also deemed to be ‘sales in the course of exports’ and hence zero-rated. But a reading of Rule 41 envisages the existence of Form H and producing this form is one of the conditions for obtaining refund for the penultimate seller.
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Input tax credit can be taken in respect of inputs used in relation thereto
SUMMARY:
There appears to be conformity with the ‘zero rating’ status conferred on exports, and on the time period for refund. However, State VAT Acts require Security or Bank Guarantee for issue of refunds, which has not been provided in the White Paper.
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