GST Export Compliance (India) — Ground-Truth Regulatory Engine

GST Export Compliance (India) — Ground-Truth Regulatory Engine

Purpose & Scope

Indian exporters — goods or services — who need to navigate the high-stakes GST and customs framework for their exports: selecting between LUT and IGST payment, structuring zero-rated invoices, avoiding lethal traps like Rule 96(10) or Intermediary reclassification, claiming ICEGATE/RFD-01 refunds, and tracking RBI EDPMS / FEMA 9-month realization timelines.

[!CAUTION] CRITICAL LEGAL & TAX WARNING: Export compliance errors in India carry severe statutory consequences under the CGST Act, IGST Act, Customs Act, and FEMA — including 18% interest, 100% penalties under Section 74, frozen bank accounts, and potential prosecution under Section 132. This skill acts as a precision computational and drafting guide; all filings must be approved by a qualified Chartered Accountant (CA) or Customs Broker (CHA).

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🛑 ZERO ASSUMPTIONS & GROUND TRUTH PROTOCOL

To ensure absolute safety and prevent catastrophic compliance errors, the AI must strictly enforce these ground-truth rules:

1. NEVER Assume Duty-Free Inputs Status: Never assume whether an exporter has availed Advance Authorisation, DFIA, EOU, or concessional 0.1% GST. If unknown, the agent MUST explicitly ask or present the Rule 96(10) restriction upfront.
2. NEVER Assume Exchange Rates: Never use arbitrary market spot rates for customs valuation. Section 14 of the Customs Act mandates using the CBIC notified exchange rate in effect on the date of filing the Shipping Bill.
3. NEVER Guess or Assert HSN/SAC Codes as Final: Never invent or assert a tariff code with finality. Provide candidate headings based on the official tariff schedule and require confirmation against the CBIC HSN portal.
4. NEVER Assume Service Export Eligibility: For services, never assume zero-rating until verifying that payment is received in convertible foreign currency (or approved Special Vostro Account) and that the service is not an Intermediary arrangement under Section 13(8)(b).
5. NEVER Assume Turnover Proportions: In Rule 89(4) calculations, never assume total turnover equals export turnover. Always demand exact figures for Adjusted Total Turnover, Net ITC, and verify the 1.5x domestic like-goods valuation cap.

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The 4 High-Risk Traps Every Export Answer Must Guard Against

1. The Rule 96(10) Prohibition Trap

• The Trap: If an exporter has imported raw materials under Advance Authorisation (AA), DFIA, or EOU scheme (Notification No. 78/79-Customs), or purchased domestic inputs at the concessional 0.1% merchant export rate (Notification No. 40/2017 or 41/2017), they are STATUTORILY FORBIDDEN FROM EXPORTING ON PAYMENT OF IGST WITH AUTOMATED REFUND.
• The Consequence: Claiming an IGST refund in violation of Rule 96(10) triggers immediate Show Cause Notices (SCN) demanding 100% refund recovery + 18% interest + penalty.
• The Safeguard: Always check if the exporter availed duty-free input schemes. If YES $\rightarrow$ They MUST export under LUT only.

2. The Rule 96B Foreign Exchange Clawback Trap

• The Trap: Under GST Rule 96B, if export proceeds are not realized in convertible foreign exchange within the RBI/FEMA 9-month window, the entire GST refund (IGST or ITC) must be paid back to the government with 18% interest within 30 days.

3. The "Export of Services" vs. "Intermediary" Trap (Section 13(8)(b) IGST Act)

• The Trap: IT/tech/marketing consultants who act as brokers, agents, or facilitators between foreign clients and third parties are classified as "Intermediaries". Under Section 13(8)(b), their Place of Supply is deemed to be India, disqualifying them from zero-rating and triggering 18% GST liability retroactively.
• The Safeguard: Must satisfy all 5 cumulative tests under Section 2(6) of IGST Act (see references/export-services-compliance.md).

4. SCOMET & Dual-Use Restrictions

• The Trap: Exporting items covered under DGFT SCOMET categories without a specific license is a non-bailable offense under the Weapons of Mass Destruction (WMD) Act and FTDR Act.

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Core Decision Framework: LUT vs. IGST Payment

                               ┌─────────────────────────────┐
                               │  Exporting from India       │
                               └──────────────┬──────────────┘
                                              │
                     ┌────────────────────────┴────────────────────────┐
                     ▼                                                 ▼
        Availing Duty-Free Inputs?                       Standard Domestic Inputs?
     (Advance Auth / EOU / 0.1% GST)                    (Paid standard GST on inputs)
                     │                                                 │
                     ▼                                                 ▼
      ┌─────────────────────────────┐                  ┌──────────────────────────────┐
      │     MUST USE OPTION A       │                  │  CAN CHOOSE OPTION A or B    │
      │  Export under LUT (RFD-11)  │                  ├──────────────────────────────┤
      │  No IGST Paid Upfront       │                  │ Option A: LUT + RFD-01 ITC   │
      │  Claim ITC via RFD-01       │                  │ Option B: Pay IGST + ICEGATE │
      └─────────────────────────────┘                  └──────────────────────────────┘

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Dynamic Routing to Specialized Reference Modules

Load only the reference file matching the user's specific context:

• references/lut-filing.md: Form GST RFD-11 filing, witness details, validity timeline, and lapse condonation.
• references/igst-refund-icegate.md: Shipping Bill matching, Table 6A, Rule 96(10) validations, and ICEGATE error resolution (SB001–SB006).
• references/gstr-reconciliation.md: Three-way reconciliation between GSTR-1, GSTR-3B Table 3.1(b), and Customs EDI shipping bills.
• references/rfd01-lut-refund.md: Rule 89(4) ITC refund formula (1.5x domestic turnover cap, capital goods exclusion), Statement 3A prep.
• references/export-services-compliance.md: 5 cumulative tests of Section 2(6), Intermediary defense, and FIRC/e-BRC purpose codes.
• references/fema-edpms-compliance.md: RBI 9-month realization clock, EDPMS caution-listing defense, write-offs, and Rule 96B repayment.