Chatroom: 'No GST rebate or exemption against supply of services to EOUs'

I just returned from abroad and have some unspent foreign exchange with me. Can I use it for some other purpose? Can I keep it with me for my next overseas visit? Or, do I have to surrender it to the bank and if so, within what period?

You can use the unspent foreign exchange for any other eligible current account payments, which includes foreign exchange required for your next visit. You can retain foreign currency, travelers’ cheques and currency notes up to an aggregate amount of $2000, and foreign coins without any ceiling beyond 180 days from the date of your return. Other unspent foreign exchange must be surrendered to an authorised dealer within 180 days of the date of your return.

We are executing one DDP shipment by ocean route to Africa. Our freight forwarder mentions certain charges payable by us at the destination port, such as customs clearance, arrival notice, bond and entry verification fees, ICD charges at the border, plus 18 per cent VAT. Can we claim credit of this VAT payable in Africa? If yes, then what documentation is required?

Section 16 of the CGST Act, 2017 allows you to take input tax credit of the input tax charged on any supply of goods or services, or both, subject to certain conditions. Section 2(62) of this Act defines “input tax”.  It mainly includes the taxes payable under the GST laws, and not taxes paid under other laws in India or any other country. Since no ITC is available for the other taxes payable, I see no need to discuss the documentation requirements.

We provide certain services to manufacturing units that include some units in Special Economic Zones (SEZs) and some Export Oriented Units (EOUs). We charge GST to all the DTA units and EOUs, but do not charge GST on supplies to units in SEZs. Is there any exemption for supplies of services to EOUs, or is there any way we can claim refund of the GST paid on supply of services to EOUs?

No. Supplies of services to SEZ units or SEZ developers are specifically zero-rated through Section 16 of the IGST Act, 2017.  That is not the case with supplies to EOUs. Through notification 48/2017-CT dated October 18, 2017, the government has notified supply of goods by a registered person to EOUs as deemed exports. This notification covers only supply of goods, not supply of services. So, all your supplies of services to EOUs must be on payment of GST.

Our foreign buyer is willing to give us an advance against export orders but wants us to pay interest on it. Can we agree to his request, and is there any limit on the rate of interest we can agree upon?

Yes. The rate of interest on the advance payment should not exceed the London Interbank Offered Rate (Libor), or any other widely accepted or alternative reference rate, plus 100 basis points.

Business Standard invites readers’ SME queries related to GST, export and import matters. You can write to us at smechat@bsmail.in