GST Council Clears The Way For Indian Rupee Trade By Removing Tax Barriers

In an effort to boost India's exports, the GST Council has introduced measures to support foreign trade. One such measure involves providing tax credits to service exporters who receive payments in Indian rupees. 

This is especially important for trade with countries like Iran and Russia, which face global sanctions.

The Indian government is actively promoting trade conducted in Indian rupees with multiple countries as a way to reduce dependence on the U.S. dollar.

To achieve this, banks from more than 20 countries have set up special rupee (INR) Vostro accounts with Indian banks to facilitate payments for their imports from India.

This clarification will provide much-needed relief to exporters who have experienced delays in their GST refunds due to disputes on this matter. Furthermore, it will protect them from GST-related demands.

This clarification will be particularly beneficial to businesses that deal with export proceeds from countries like Iran or Russia. These countries are affected by U.S. sanctions, which can disrupt regular remittance channels.

Relief For Suppliers To Special Economic Zones (SEZs)

The GST Council has taken measures to address the issues caused by a notification issued on July 31, which created complications for companies supplying goods or services to (SEZs) when it came to claiming tax refunds.

Mr. Chhabria explained that this action is intended to correct a mistake that occurred due to the accidental exclusion of these supply categories from the option to get a refund with the payment of tax. This exclusion happened after changes were made to the IGST Act.

By explicitly including these supplies in the list of those eligible for rebates, the Council has removed any ambiguity on this matter. This step also helps avoid potential concerns about the working capital for domestic industries involved in SEZ supplies.

Supplies to SEZs Under GST: Rules & Provisions

The Council has also recommended the issuance of a circular to provide clarity on how to determine the place of supply for services related to the transportation of goods, including those carried out by mail or courier, in cases where either the service provider's location or the recipient's location is outside India. 

This communication is expected to address concerns related to the supply of advertising and co-location services as well. The industry has been eagerly waiting for clarifications regarding the export of goods through mail or courier services for some time. 

However, a closer examination of the specific details will be needed to understand their implications. It's not entirely clear whether the clarifications about advertising and co-location services apply to export situations or domestic supply locations.

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