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What is an export invoice under GST?

Every export business today, whether big or small, is well aware about Goods and Services Tax (GST) and related laws that are necessary for intrastate and interstate invoices. With the help of an export invoice, the customs authority can verify the contents of a shipment and calculate applicable taxes. An export invoice is usually created by an exporter.

What is an export invoice?

An export invoice is a document containing description of the goods provided by an exporter and the amount due from the importer. The format of an export invoice is more or less similar to a regular tax invoice. However, there are certain additional details that are included in an export invoice such as exporter and importer details, type of export, shipping bill, etc.

What is the need for an export invoice?

• An export invoice serves as a proof that a particular transaction has taken place between two parties - buyer and seller on a particular date.
• If the product is damaged during transportation, an export invoice lets the importer know where to claim insurance from.
• Export invoice is needed to prevent any difficulty with your shipment and ensuring that the exporter has paid the right taxes and duties.

What documents are included in an export invoice?

Some of the documents included in an export invoice are¹:

• Name, address and relevant information like GST number of the exporter
• Name, address billing and shipping address of the importer
• Description of the product, type of shipment and price of shipment
• Product’s country of origin
• HTS (Harmonized Tariff Schedule) classification number
• Date of issue of the invoice, invoice number and total value of the invoice
• Conversion rate value
• Details of product’s insurance
• Signature (physical or digital) of the exporter or the authorized person

What is the difference between export invoice and accounting invoice?

Some of the key differences between export invoice and accounting invoice are:

Export invoice

• Export invoices include commercial invoices used in global trade.

• An export invoice includes the economic obligations as well as logistics detail including consignment weights, measures, delivery terms, etc.

Accounting invoice

• An accounting invoice contains information that covers requirements for local or domestic sale and transactions.

• An accounting invoice holds details mostly about the economic requirements of trade and its accounting impact.

What should be considered while issuing an export invoice?

The type of export is a key factor to consider while an exporter is issuing an export invoice²:

Export under Bond/Letter of Undertaking

An exporter does not have to pay IGST while exporting, but it is necessary to file a Letter of Undertaking while exporting goods and services in this case.

Export with IGST

An exporter will have to pay IGST at export and later, claim a refund. A refund can be claimed on the portion of the ITC (Input Tax Credit) remain unutilized and IGST paid on the goods and services exported.

SEZ with IGST

To boost the economic conditions through exports, relaxations are given in terms of taxes. The supply of goods to a Special Economic Zone (SEZ) is treated as a zero-rated supply, which means the taxes on the export need not be paid.

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Frequently Asked Questions

How are exports treated under GST?

In case of zero-rated supply, GST for exports will be levied on the goods either at the input stage or the final product stage.

What is the time limit to raise an export invoice?

As per Section 31 of the CGST Act 2017, the time limit is dependent on whether it is supply of goods or a supply of services³.
- When the supply involves the movement of goods, an export invoice is issued before or at the time of removal of goods for delivery.
- When the supply involves services, an invoice is issued before or after providing the services but within a specified period.

Why is an invoice used in export and import trade?

Invoices act as a proof of transaction and that every document related to the trade agreement is accurate and duly signed by respective parties with reliable terms. An importer can use an invoice and other shipping documents to clear the shipment at customs.

Can you export without a commercial invoice?

A commercial invoice is used by customs authorities worldwide for inspection purposes, estimating custom duties and maintaining international trade statistics. Without a commercial invoice generated, you cannot go ahead with exports.

Who creates an export Invoice?

An exporter issues export invoices to the importer. The invoice acts as a proof of sale. When exporting goods overseas, shippers must create export invoices to avoid problems or delays in the export process.

Is an e-invoice compulsory for export?

No, e-invoicing is not mandatory. As per a recent notification issued, all businesses having an aggregated revenue of more than fifty crores, are required to implement the e-invoicing system⁴.

Published on July 21, 2022.

Sources:
1. https://www.trade.gov/common-export-documents
2. https://cleartax.in/s/export-invoice
3. https://www.cbic.gov.in/resources//htdocs-cbec/gst/51_GST_Flyer_Chapter5.pdf;jsessionid=721413B3DD3B0B5D18BD03387528EC41
4. https://www.cbic.gov.in/resources//htdocs-cbec/gst/Tax_Invoice_and_other_new.pdf
5. https://www.cbic.gov.in/resources//htdocs-cbec/gst/notfctn-01-central-tax-english-2022.pdf
6. https://www.cbic.gov.in/resources//htdocs-cbec/gst/sectoral-booklets-exports.pdf

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*Map not to scale. The map has been used for design and representational purpose only, it does not depict the geographical boundaries of the country. These do not conform to the external boundaries of India recognized by the Survey of India.

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