Deemed exports are to be treated similar to exports, these supplies are not zero-rated supplies by default. Thus, GST shall be applicable on all the deemed export at the point of supply. Furthermore, these Supplies cannot be made under Bond / LUT without payment of tax.
However, the supplier or the recipient of the goods can claim a refund of the tax paid on such supply. But once the refund has been claimed by the supplier, the recipient will not be eligible to claim the ITC on the same.
The process of supplying the goods (produced/manufactured in the country) on an international scale is known as Export. Such supply of goods and service contribute to the growth of an economy and thus enjoy the perk of being treated as zero-rated supplies. However, there is a certain category of supplies, as notified by the Central Government, wherein the supply is treated as an export, even if the goods do not leave the national borders. Such supply of goods is known as Deemed Exports under GST.
Section 2(39) of the CGST Act, 2017 defines the term ‘deemed exports”. This would be relevant for extending refund benefit under section 54 of the CGST Act
Export of goods, in common parlance, means taking goods outside India. Such supplies are treated as zero-rated supplies under GST. However, the Central Government may notify certain categories of supplies of goods, which would be treated as deemed exports.
Meaning and Conditions:
“Deemed Exports” refers to supplies of goods manufactured in India (and not services) which are notified as deemed exports under Section 147 of the CGST/SGST Act, 2017.
Deemed exports are those supplies of goods that are notified as ‘deemed exports’ where:
The goods supplied do not leave India;
Payment for such supplies is received in Indian Rupees/ Convertible Foreign Exchange; and
Such goods are manufactured in India.
Notified Deemed Exports
Followings are treated as deemed exports:
Supplies to EOU / STP / EHTP / BTP
Supplies against Advance Authorisation/ DFIA
Supply of goods to mega power projects against International Competitive Bidding
Supplies to United Nation Agencies
Supply of goods to nuclear projects through competitive bidding
Supply of marine freight containers
Supplies against EPCG authorization
Supplies to projects against international competitive bidding
Supplies to projects with zero customs duty