New GST Circular 226/2024: Mechanism for IGST Refund on Export Price Revisions

Introduction

The Central Board of Indirect Taxes and Customs (CBIC) has issued Circular No. 226/2024-GST, dated July 11, 2024. This introduces a new mechanism for exporters to claim refunds on the additional Integrated Goods and Services Tax (IGST) paid following an upward revision in the prices of goods post-export.

Overview of the New Mechanism

Filing for Refund

• Eligibility: Exporters who have paid additional IGST due to upward price revision post-export.
• Process: File a refund claim using FORM GST RFD-01. Until a specific category is developed, claims should be filed under “Any other” with specific remarks.
• Amendment: Accompanied by the recent amendments in CGST Rules through Notification No. 12/2024-CT dated July 10, 2024.

Required Documentation

• Essential Documents: Shipping bill, original and supplementary invoices, proof of additional IGST payment, and the respective tax forms.
• Verification Documents: A certificate from a chartered or cost accountant confirming the price revision and its impact on foreign exchange remittances.
• Supporting Statements: Statement 9A and 9B of FORM GST RFD 01.

Application Processing

• Scrutiny: Detailed examination of completeness, eligibility, and compliance with the prescribed guidelines.
• Authority Involvement: The jurisdictional GST officer is responsible for processing the claim based on documentary proof and details provided by the GST Network (GSTN).

Time Limit for Filing Refund

Refund applications must be filed within two years from the relevant date as outlined in the CGST Act. This ensures timely submission and processing of claims.

Special Considerations for Price Decreases

If the price decreases post-export, the exporter must deposit the proportionate excess IGST refund received, ensuring fairness and compliance with the tax regulations.

Impact on Trade and Industry

This mechanism addresses common challenges faced by exporters, facilitating better cash flow management and compliance with international trade contracts that often require flexible pricing. It underscores the government’s commitment to supporting the export sector through simplified tax procedures.

Conclusion

Circular No. 226/2024-GST significantly enhances the operational efficiency of India’s export framework, accommodating the dynamic nature of international market conditions. Exporters are encouraged to familiarize themselves with the new procedures and ensure compliance to benefit from these streamlined processes.

Further Guidance

For detailed information or assistance with the refund application process, exporters should consult the full text of Circular No. 226/2024-GST or contact their jurisdictional GST officer.

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This article is only a knowledge-sharing initiative and is based on the Relevant Provisions as applicable and as per the information existing at the time of the preparation. In no event, RMPS & Co. or the Author or any other persons be liable for any direct and indirect result from this Article or any inadvertent omission of the provisions, update, etc if any.

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