Updates on Circular No. 233/27/2024-GST: Clarification on IGST Refunds for Exporters

The Central Board of Indirect Taxes and Customs (CBIC) issued Circular No. 233/27/2024-GST on 10th September 2024. This circular clarifies the rules on IGST refunds for exporters who previously availed tax exemptions on imported inputs.

Key Points:

Rule 96(10) of CGST Rules, 2017:

• The rule restricts exporters from claiming refunds on IGST if they imported inputs without paying integrated taxes. This was due to the benefits they received under Notification No. 78/2017-Customs and Notification No. 79/2017-Customs.

• Some exporters, however, want to regularize their tax status by paying IGST and compensation cess on those imports after the fact.

Amendment to Rule 96:

• In March 2020, the CBIC added an explanation to Rule 96(10), which took effect retroactively from October 2017. This explanation says that if an exporter only took advantage of the Basic Customs Duty (BCD) exemption and paid IGST and compensation cess, they would still be eligible for an IGST refund on exports.

This update helps exporters regularize their payments and still benefit from refunds.

How Refund Regularization Works:

• Exporters who imported goods without paying IGST can now settle the tax (with interest). After doing this, they can claim their IGST refunds on exports.

• To comply, exporters must reassess their Bill of Entry through their Customs authority after settling the taxes.

Steps for Exporters:

• If an exporter pays IGST and compensation cess after importing goods, their IGST refund claim for exports will remain valid.

• The reassessed Bill of Entry will confirm compliance and ensure smooth refund processing.

Public Awareness:

• The CBIC has advised issuing trade notices to inform exporters about these changes.

• The Board also welcomes feedback on any issues that arise during implementation.

Impact on Exporters:

This circular simplifies the refund process for exporters. Those who originally received tax exemptions but later paid their dues can still claim IGST refunds. This update ensures uniformity across tax authorities and helps businesses avoid disputes.

In summary, Circular No. 233/27/2024-GST gives exporters clear guidance on claiming IGST refunds. This will make it easier for businesses to manage their taxes and continue operations smoothly.

For more information please refer below Circular:

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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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