In line with the recommendations from the 54th GST Council Meeting held on September 9, 2024, the Central Board of Indirect Taxes and Customs (CBIC) has issued Notification No. 20/2024 – Central Tax, dated October 8, 2024, amending various provisions of the Central Goods and Services Tax (CGST) Rules, 2017. These amendments primarily address the concerns of exporters and aim to simplify the refund processes under the GST regime. The changes take effect from October 8, 2024.
Key Amendments:
1. Clarification on Refund of IGST on Exports (Contravention of Rule 96(10))
The CBIC clarified that if exporters initially imported inputs under the concessional schemes (such as Notification No. 78/2017-Customs and 79/2017-Customs), but later paid IGST and compensation cess on such imported inputs, along with the reassessment of the Bill of Entry by customs authorities, the IGST paid on exports refunded to the exporter shall not be considered a contravention of Rule 96(10) of the CGST Rules. This ensures that refunds on zero-rated exports under such conditions are compliant with the GST framework.
2. Omission of Rules 96(10), 89(4A), and 89(4B)
The CBIC has omitted Rule 96(10), Rule 89(4A), and Rule 89(4B) from the CGST Rules, simplifying the refund procedures for exporters who previously availed benefits under specific concessional or exemption notifications. This amendment provides relief by eliminating restrictions on refund claims, thus facilitating quicker processing of refunds for exporters.
3. Amendments to Rule 89: Definitions of Refund Calculations
The definitions relevant to refund calculations, including “Net ITC”, “Turnover of zero-rated supply of goods”, and “Adjusted Total Turnover”, have been updated. These changes ensure that exporters can claim refunds more efficiently without being subject to the previously restrictive clauses of Rule 89(4A) and Rule 89(4B).
Before and After Comparison: Rule 89 Definitions
| Provision | Before Amendment | After Amendment |
|---|---|---|
| Net ITC | Excluded ITC claimed under sub-rules (4A) or (4B). | Same provision, but no longer subject to exclusions from sub-rules (4A) or (4B) due to their omission. |
| Turnover of Zero-Rated Supply of Goods | Excluded turnover related to supplies where refunds were claimed under sub-rules (4A) or (4B). | Turnover of zero-rated supply is simplified with the exclusion of references to sub-rules (4A) and (4B). |
| Adjusted Total Turnover | Excluded turnover of supplies related to refund claims under sub-rules (4A) or (4B). | Exclusions related to sub-rules (4A) and (4B) have been removed for simplification and ease of refund calculations. |
Clarifications Regarding Exports and Import Benefits:
Exporters who availed concessions under the Customs Notifications but later paid applicable IGST and compensation cess on imported inputs will now find it easier to claim refunds. The amendments clarify that reassessment of the Bill of Entry and payment of IGST will make their export refund claims compliant with the rules, addressing concerns over working capital blockage due to delayed refunds.
Before and After Comparison: Refund of IGST Paid on Exports (Rule 96)
| Provision | Before Amendment | After Amendment |
|---|---|---|
| Refund of IGST Paid on Exports | Refund claims were restricted if the exporter availed concessions under certain Customs notifications but later paid IGST/cess. | Refund claims are now allowed as long as IGST/cess is paid, and the Bill of Entry is reassessed, aligning the process with Rule 96(10). |
Conclusion:
The Notification No. 20/2024 – Central Tax simplifies and accelerates the GST refund process for exporters. By omitting certain restrictive rules (Rule 96(10), Rule 89(4A), and Rule 89(4B)), the amendments ease compliance burdens and expedite refund processes. These changes foster a more business-friendly environment by reducing procedural hurdles and providing clarity to exporters.
Key Takeaways:
- Exporters who have reassessed their Bill of Entry and paid IGST/compensation cess can claim IGST refunds without being in violation of Rule 96(10).
- The omission of Rules 96(10), 89(4A), and 89(4B) simplifies the refund process and addresses long-standing concerns of exporters about blocked refunds.
- The changes streamline the definition of “Net ITC” and “Adjusted Total Turnover,” facilitating easier calculations for refund claims.
These amendments are expected to improve the ease of doing business for exporters and ensure smoother refund mechanisms under the GST framework.
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