Credits in respect of exports

In this blog, we look at a query on the restriction of credits in case of exports.



A company is engaged in providing software support services to MNCs having operations in India and overseas. If the entire contract is with the Indian companies, will there be any input tax restrictions as the services in India would be taxed and services to overseas locations would qualify as exports?



No. In the instant case, there would no restrictions on input credits. Input tax restrictions would apply where a person supplies taxable as well as exempt services. Although export of services would not suffer tax, they are classified as “zero-rated supplies”. Consequently, they would be reckoned as taxable supplies for the purposes of input tax credits.

Given this, there are no exempt supplies, and therefore, no restriction of input tax credits. This would hold good even where the contract for services to overseas locations is entered into with the overseas entities:

Legislative reference: Section 17 of the CGST Act, 2017 read with Section 16 of the IGST Act, 2017

Authors: Meghana Belawadi and NR Badrinath


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1 Comment

  1. Yes, Input Tax Credit can be claimed by exporters on the expenses incurred by them.

    If there is no output liability, the exporter can also claim refund of the GST paid on inputs. Refer:

    However, the main issue here is that its been more than 80 days since the introduction of GST and Refund forms have not been released yet.

    The exporters are making representations daily to the GST Council as a lot of their money is stuck with the dept as GST Refund is not being issued. This is negatively impacting their working capital availability as a lot of money is stuck with the dept.

    I hope these issues get resolved soon.

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