Deemed Exports: The Two Regimes, What You Can Claim and When

Deemed exports are supplies where the goods never leave India, but the transaction is treated as an export for benefit purposes. The catch that costs exporters money is that there are two separate deemed exports regimes running side by side, one under the Foreign Trade Policy and one under GST. They have different lists, different claimants, different forms and different deadlines, and a claim filed under the wrong one is simply late.

This guide sets out both lists, who claims what, the two time limits, and the one supply type that everybody wrongly assumes is covered.

Deemed Exports Under FTP and Under GST Are Not the Same List

This is the whole problem in one sentence. A supply can be deemed exports under the Foreign Trade Policy and give you nothing under GST, or the reverse.

The FTP list, at Para 7.02 of Chapter 7, covers supplies by a manufacturer against an Advance Authorisation, Advance Authorisation for annual requirement or DFIA, supplies to an EOU, STP, EHTP or BTP, and supplies of capital goods against an EPCG Authorisation. It then adds supplies by main or sub-contractors to projects financed by multilateral or bilateral agencies, to the United Nations and other international organisations, and to nuclear power projects above the specified capacity.

The GST list is shorter and closed. Notification 48/2017-Central Tax notifies exactly four: supply against an Advance Authorisation, supply of capital goods against an EPCG Authorisation, supply to an EOU, and supply of gold by a bank or notified PSU against an Advance Authorisation.

Read those two lists side by side and the gaps appear. A supply to a UN-financed project is deemed exports under FTP and not under GST. Neither is an error, they are different statutes with different purposes.

Why SEZ Supplies Are Not Deemed Exports

This is the single most common misunderstanding, and it is expensive because it sends people to the wrong refund route.

A supply to a unit or developer in a Special Economic Zone is a zero-rated supply under Section 16 of the IGST Act. It is not deemed exports. That distinction is not academic: a zero-rated supply can be made under a bond or LUT without paying tax, while deemed exports cannot.

Such supplies are taxable. GSTN puts it plainly: such supplies can be made only on payment of tax and cannot be supplied under a bond or LUT. You charge the tax, and then somebody claims it back. Anyone who has issued an LUT-backed invoice for an EOU supply has a correction to make.

Deemed Export Benefits Under the FTP Regime

Para 7.03 lists the deemed export benefits available on a qualifying supply:

• Advance Authorisation, Advance Authorisation for annual requirement, or DFIA.
• Deemed export drawback.
• Refund of terminal excise duty, for excisable goods in Schedule 4 of the Central Excise Act, 1944.

Two conditions from the Handbook of Procedures decide whether the claim is even admissible. The claim can be filed only after payment has been received in full for the supplies made, and the payment has to come through the normal banking channel, evidenced by e-BRC. Part payment does not start the clock, it stops it.

The GST Refund: Supplier or Recipient?

Under Rule 89(1) of the CGST Rules, the refund can be claimed by either side, but not both:

• The recipient claims it, as the default route.
• The supplier claims it instead, but only where the recipient does not take input tax credit on that supply and furnishes an undertaking saying so.

Settle this before the invoice is raised, not after. When both parties assume the other is claiming, the refund is usually time-barred before anyone notices. Put the undertaking in the purchase order.

The Two Deadlines That Kill These Claims

The twelve-month DGFT window is the one that catches people, because it runs from full realisation rather than from the invoice or the supply. A buyer who holds back five per cent retention for a year can quietly consume your entire claim period.

Documents the DGFT Claim Needs

The FTP claim is filed in ANF-7A on the DGFT portal, by whichever party is claiming, and that party must hold an IEC. Our guide on checking that an IEC is active is worth running first, because a deactivated code stops the filing.

• Proof of full payment through banking channels, as per e-BRC.
• A non-availment of CENVAT credit certificate, Annexure-I to ANF-7A.
• A disclaimer certificate from the recipient, Annexure-III to ANF-7A, where the supplier is claiming.
• A payment certificate from the project authority, Appendix-7D, for the project supply categories.

The disclaimer certificate is the document most often missing. It is the recipient’s written confirmation that they are not claiming, and without it the supplier’s claim has no standing.

How JPARKS INDIA Helps With Deemed Exports

Three things to carry away. The FTP list and the GST list are not the same, so check your supply against both. SEZ supplies are zero-rated, not deemed exports, and cannot be treated as such. And the DGFT clock runs twelve months from full payment realisation, not from the invoice.

JPARKS INDIA handles deemed exports work, backed by S.K. Agency, AEO-LO customs brokers since 1990. We test each supply against both regimes, work out which deemed export benefits are actually claimable, file ANF-7A with the annexures that actually get accepted, settle supplier versus recipient before the invoicing starts, and chase project authority certificates that are holding claims up.

Supplying an EOU, an EPCG holder or a funded project? Send us the supply details through our contact page and we will tell you which regime it falls under and what is claimable.

Not sure which regime your supply falls under? Book a free consultation with the JPARKS INDIA EXIM compliance team.

Frequently Asked Questions

Q1. What are deemed exports in simple terms?

Supplies where the goods do not leave India but are treated as exports for benefit purposes. The supplier is paid in Indian rupees or foreign exchange, and the goods stay in the country.

Q2. Are supplies to an SEZ deemed exports?

No. Supplies to an SEZ unit or developer are zero-rated under Section 16 of the IGST Act. Deemed exports is a different category with different rules.

Q3. Can a deemed exports supply be made under an LUT without paying GST?

No. Such supplies must be made on payment of tax. The tax is then refunded to whichever party is eligible.

Q4. Who claims the GST refund, the supplier or the buyer?

The recipient by default. The supplier can claim instead where the recipient does not take input tax credit on the supply and gives an undertaking to that effect.

Q5. Which supplies are notified as deemed exports under GST?

Four: supply against an Advance Authorisation, capital goods against an EPCG Authorisation, supply to an EOU, and supply of gold by a bank or notified PSU against an Advance Authorisation, under Notification 48/2017-Central Tax.

Q6. What is the time limit for a DGFT deemed exports claim?

Twelve months from the date of realisation of full payment for supplies under Para 7.02(a) to (c), and twelve months from receipt of supplies by the project authority or receipt of payment for the project categories.

Q7. Which form is used for the DGFT claim?

ANF-7A, filed online, with the non-availment of CENVAT credit certificate and, where the supplier claims, a disclaimer certificate from the recipient.

Q8. Can the claim be filed before the buyer has paid in full?

No. The claim can be filed only once payment has been received in full for the supplies made, through normal banking channels.