Applicability of GST Compensation Cess on Penultimate Export Sales/ Procurement from Unregistered Dealers
By: – Ramnarayan Balakrishnan
Goods and Services Tax – GST
Dated:- 28-10-2017
Vide my article dated 14 September 2017 published by Tax Management India, I had highlighted the problems from the legal and systems perspectives owing to delay in issue of SGST Notifications by the States. The problems I had highlighted in the above article remain unresolved to this date.
Pending the above, there are two new developments which seem to have thrown up a new issue, which I have discussed below:
1. Reduced Rate of GST on penultimate export sale
In what seems to be an effort to avoid blockage of cash flow to merchant exporters,
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the Central Government
SGST @ 0.05%
0.05
Subject to equivalent notifications to be issued by the State Government
GST Compensation Cess (assuming that the car sold has engine capacity > 1500 cc)
20.00
GST Compensation Cess has not been notified as exempt (or rate reduced) by the Central Government, hence, it would continue to apply on penultimate export sale also.
Total GST
20.10
Even though the government has accorded a great benefit for merchant exporters, they would be able to enjoy that benefit only if,
* The corresponding SGST notifications are issued immediately by the respective
State Governments; and
* The Central Government clarifies on the applicability of GST Compensation Cess on sales preceding an export sale.
2
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