Exports to Nepal: Refund of IGST permissible

SC  Vasudeva

I have an issue related to export of goods to Nepal. We purchase goods from Delhi and sell in India as well as in Nepal. Earlier when GST was not implemented, there was no VAT/other tax applicable when we used to sell our goods to Nepal. But after July 1 with the GST implementation, what is the applicability of taxes? Is IGST applicable on goods sold to Nepal? Is benefit of Para No. 2.52 (a) of FTP (2015-2020) available? If we charge IGST on goods sold in Nepal, is the refund for that IGST available? Can we claim ITC of GST (CGST + SGST) paid on purchase of goods? — ankit jain

The Central Board of Excise and Custom (Commercial Taxes Department) has issued Frequently Asked Questions (FAQs) with regard to export of goods. These were published in newspapers on August 2, 2017.  Question No. 3 of the said FAQ explains the procedure relating to export as under:-

• The goods and services can be exported either on payment of IGST which can be claimed as refund after the goods have been exported, or under bond or Letter of Understanding (LUT) without payment of IGST.
• In case of goods and services exported under bond or LUT, the exporter can claim refund of accumulated ITC on account of exports.
• In case of goods, the shipping bill is the only document required to be filed with the Customs for making exports. Requirement of filing ARE 1/ARE 2 has been done away with.
• The supplies made for export are to be made under self-sealing and self-certification without any intervention of the departmental officer.
• The shipping bill filed with the Customs is treated as an application for refund of IGST and shall be deemed to have been filed after submission of export general manifest and furnishing of a valid return in Form GSTR-3 by the applicant.

Further, reply to question No. 8 wherein the issue with regard to export of goods to Nepal or Bhutan has been explained.  The relevant reply reads as under:-

• n Export of goods to Nepal or Bhutan fulfils the condition of GST Law regarding taking goods out of India.  Hence, export of goods to Nepal or Bhutan will be treated as zero rated and consequently will also qualify for all the benefits available to zero rated supplies under the GST regime. However, the definition of ‘export of services’ in the GST Law requires that the payment for such services should have been received by the supplier of services in convertible foreign exchange.

The replies given in the FAQ cover all the points which you have raised with regard to exports to Nepal. It may be added that it has been explained in the said FAQ that there is no difference with regard to treatment to be followed under GST regime for export by a manufacturer or a merchant exporter.

My daughter has taken a postal life insurance policy of Rs 5 lakh in her name.  Its tenure is 13 years and premium is Rs 2,975 per month. The agent gave us the receipt for Rs 3,068 (Premium: Rs 2,975 and service tax @3%: Rs 93) Is service tax @ 3% admissible?  If yes, for how much period we have to pay it? — baldev raj

Service tax is chargeable on the insurance premium payable by an assessee. You have to therefore make payment of premium along with the amount of service tax thereon.  Service tax or GST as the case would be payable as and when the premium is paid. The entire premium, including service tax, is allowable as deduction under Section 80C of the Income-tax Act 1961, (The Act).

My mother is 63 years old. She is retired from government service. Her total annual income (1-4-17 to 31-3-18) from pension + FD interest is Rs 6,72,000  (approx). My sister, 32, is unmarried and unemployed. She has no source of income. She has a PPF account in post office. If my mother deposits Rs 1 lakh in her PPF account, will she get rebate under Section 80C or not? — harpreet singh

According to the provisions of Section 80C of the Act, an individual assessee is entitled to claim deduction against his total income of an amount not exceeding Rs 1,50,000 paid or deposited in various schemes 

specified in the aforesaid section.  Sub-section (2) of the aforesaid section specifies various schemes. Clause (v) of the said Sub-section read with Sub-section (4) of the said section covers contribution to any provident fund set up by the Central Government and notified by it in this behalf in the Official Gazette, where such contribution is made to an account standing in the name of the individual, 

the wife or husband and any child of such individual. Therefore, your mother can deposit Rs 1,00,000 in the PPF account of her daughter and she will be 

entitled to claim the deduction in respect of the said amount against her income.