Understanding Taxation Related To A Typical Export Transaction

Which is the very basic things which you should know about the tax issues for exports. So very basic things. Very important things about taxation. Those has to be understood. One thing I already mentioned to you that all exports are zero rated with respect to Goods and Services Tax, including the services, if you are exporting services that are also zero rated. So whether you are exporting merchandise or you are exporting services, any kind of services, the GST which actually becomes the IGST, that is an integrated GST for exports is zero rated, the meaning of which is that you have different options under which you can do away with paying the GST, but for that you should have the GST registration that is very very important Another thing, but you should know that some of the export units, the type of units, are actually exempt from paying the income tax. So this is very important, on export profits, not forever, but for certain years. Generally it is five years. So for five years, if you are a 100% export oriented unit or you are in EPZ or you are in SEZ or some special zones, if you are there, export promotion special zones are there, the product wise zones are there.

If you are in that zones like STP – Software Technology Park, if you are there, you enjoy certain tax benefits for certain initial years. Generally it is 5 years and also you get 10% exemption, which is available in general on export profits. subject to certain conditions. So this benefit is also available. If you want to know more about these exemptions, you can consult with your CA who deal with it. It will give you exactly the process which is required for this. And these things are doable very easily depending on the paperwork, which you have to carry out and then you have the import duty exemptions through the refund or remission schemes. So exemption, remission, refund schemes are there on the import duty. Which are you pay directly or indirectly on import of the inputs under the different government schemes for the promotion of exports, including drawback. So drawback more or less is has been done away with. New schemes have come in place of that. But you have various schemes which are available and we’ll try to touch upon those schemes in the later sessions of this programme. So under which different schemes, under these schemes you can do away with the import duties either you do not pay or you get the refund. So those schemes are available and those need not be paid. And finally, you’ve got the double taxation benefits if you are exporting your services to countries with which India has the double taxation treaty. If that is there, then you can get these benefits. double taxation benefits. If your services have been delivered to a particular country where you have paid the tax, also, if you have paid some tax on the income which you have made in that country , for example, you have sold your services in U.S. and you have paid some tax to the U.S. authorities, and you can prove it. And you have the papers, you can get the benefit of double taxation, but it is available for the services exports. So these are few of the things which you should know about the taxation. Generally, these are the things. There maybe a little bit here and there certain tax benefits for certain items. So those you know, I have not been able to take care because that is maybe product specific. For certain products, there may be certain benefits, which I might not have mentioned here. So these are the general benefits. So for today’s agenda for the session, these were the topics which we wanted to share.

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