Guide for Claiming ITC Refunds on Exports Without Payment of Tax

Introduction

Exporters in India can claim a refund of Input Tax Credit (ITC) on zero-rated supplies, such as exports. This guide provides a detailed, step-by-step process, along with a compliance checklist, to help ensure timely and accurate ITC refund applications, minimizing delays and avoiding defaults.

Key Concepts and Legal Framework

Zero-Rated Supply under GST

• Definition: Exports are considered zero-rated supplies, meaning they are taxed at a rate of 0%.
• Refund Options:
  1. Export under Bond or LUT without paying IGST: Claim a refund of accumulated ITC.
  2. Export by paying IGST: Claim a refund of the paid IGST.
• Importance: This mechanism ensures exporters are not burdened with tax costs, enhancing their international competitiveness.

Relevant Legal Provisions

• Section 149: Allows amendments to shipping bills based on pre-existing documentary evidence.
• Section 154: Permits correction of clerical errors in customs documents.

Step-by-Step Guide for Claiming ITC Refund

Pre-Submission Steps

1. Prepare Required Documents:

   • Commercial Invoice cum Packing List
   • Bill of Lading/Air Way Bill
   • Shipping Bill/Bill of Export
   • Proforma Invoice
   • Export Order/Purchase Order
   • Certificate of Origin
   • Bill of Exchange
   • Letter of Credit
   • Declaration from Sister Concern
   • Bank Realisation Certificate (BRC)
   • Communication Records

2. File GST Returns:

   • Ensure Forms GSTR-1 and GSTR-3B are filed for all relevant tax periods.

3. Compile and Review Turnover and ITC Data:

   • Ensure the accuracy of the turnover of zero-rated supplies and the adjusted total turnover.

Submission Steps

4. Access the GST Portal:

   • Navigate to the GST portal and log in with your credentials.

5. File Refund Application in Form GST RFD-01:

   • Select the correct refund type: "Refund on account of Export of Goods/Services without payment of Tax".
   • Provide the turnover details for the relevant period.
   • The Net ITC in the "Computation of Refund to be claimed" table will be auto-populated. Adjust if necessary, excluding ITC related to capital goods, transitional ITC, and ITC already claimed under specific rules.
   • Ensure the refund claimed does not exceed the balance in the Electronic Credit Ledger.

6. Upload Supporting Documents:

   • Upload all required documents as notified under CGST Rules or Circulars.
   • Ensure the details in the documents match those provided in the refund application.

7. Submit the Application:

   • Review all entries carefully before submitting.
   • Once satisfied, submit the application.

8. Generate Application Reference Number (ARN):

   • After submission, an ARN is generated. Note this number for tracking purposes.

Post-Submission Steps

9. Track Application Status:

   • Use the "Track Application Status" feature on the GST portal to monitor the progress of your refund application.

10. Respond to Queries Promptly:

• If the Refund Processing Officer raises any queries or requests additional information, respond promptly to avoid delays.

11. Consistent Invoicing:

• Ensure that the invoice details in Form GSTR-1 match those in the refund statement (Table 6A of Form GSTR-1).

12. Amend Rejected Invoices:

• If invoices are rejected by the ICEGATE system, correct and amend them in the subsequent Form GSTR-1 filing. Reapply for the refund with the corrected details.

Detailed Compliance Checklist

Before Filing the Refund Application

1. Document Preparation:

   • Ensure all necessary documents are gathered and accurate.
   • Verify shipping details and payment receipts.

2. GST Return Filing:

   • Confirm all GSTR-1 and GSTR-3B returns are filed for the relevant periods.

3. Turnover and ITC Data:

   • Check turnover and ITC data for accuracy and completeness.

During Filing the Refund Application

4. Form GST RFD-01 Completion:

   • Enter turnover and adjusted total turnover.
   • Adjust the Net ITC in the computation table if necessary.
   • Ensure the refund amount does not exceed the balance in the Electronic Credit Ledger.

5. Document Upload:

   • Upload all supporting documents required by CGST Rules and Circulars.
   • Validate that document details match those provided in the refund application.

6. Submission Review:

   • Preview the application in PDF format to check for inconsistencies or errors.
   • Ensure all entries are accurate and complete before submission.

After Filing the Refund Application

7. Tracking and Monitoring:

   • Regularly track the status of the refund application using the ARN.
   • Address any queries or additional information requests from the Refund Processing Officer promptly.

8. Consistent Invoicing:

   • Ensure consistency between Form GSTR-1 and refund statements.

9. Amendment of Rejected Invoices:

   • If invoices are rejected by ICEGATE, amend them in subsequent Form GSTR-1 filings and reapply for the refund.

Additional Points to Remember

• Avoid Clerical Errors:

  • Double-check all entries to avoid clerical errors which can lead to rejections or delays.

• Amendments to Shipping Bills:

  • Make any necessary amendments within 30 days post-shipment.

• Utilize Offline Utility:

  • Use the Download Offline Utility for accurate and bulk entry of document details in Statement 3.

• Maintain Communication Records:

  • Keep a record of all communications with the Refund Processing Officer and any other relevant authorities.

Caution and Compliance Due Dates

• Timely Filing: Ensure all refund applications and related GST returns are filed within the stipulated deadlines to avoid interest or penalties.
• Amendments: Make any amendments to shipping bills or invoices promptly and within the allowed timeframes.
• Responding to Queries: Address any queries from the GST authorities within the given response period to prevent delays in processing.

Conclusion

Claiming ITC refunds for exports without payment of tax involves meticulous documentation, timely filing, and diligent tracking. By following this detailed guidance note and compliance checklist, exporters can efficiently manage their ITC refund claims, avoid penalties, and ensure smooth operations in their international trade activities. Adherence to these steps will help in maintaining compliance and benefiting from the zero-rated supply provisions under GST.

Compliances for One Person Companies (OPCs) in India

In the vibrant canvas of Indian entrepreneurship, the canvas offers an array of hues, from Private Companies to Public Companies, and the distinctive entity of One Person Companies (OPCs). While the former two have clear-cut structures for conducting Annual General Meetings (AGMs), OPCs, with their singular membership, present unique challenges. This article delves into the intricacies of AGMs for OPCs under the purview of the Companies Act, 2013, elucidating common queries and emphasizing critical considerations.

Key Points for OPC AGMs under the Companies Act, 2013
AGM Overview
AGMs serve as pivotal junctions for company members to convene, deliberate, and make collective decisions. However, the solitary nature of OPCs prompts questions about the necessity of such gatherings.

1. Exemption from AGMs    OPCs enjoy exemption from the obligation to convene AGMs, given their singular membership structure. Nevertheless, certain statutory duties, notably appointing auditors, remain obligatory. 

2. Auditor Appointment Despite dispensing with AGMs, OPCs must appoint auditors at their inception. The determination of the deemed date of AGM or Board meeting becomes pivotal for this appointment.

3. Filing Financial Statements OPCs are mandated to file financial statements within 180 days from the financial year's conclusion. While not mandatory, it's prudent to ratify these statements before 27th September each year.

Conclusion

In the dynamic realm of Indian corporate governance, OPCs, despite their singular membership, are tethered to statutory obligations like appointing auditors and filing financial statements. While AGMs are not obligatory for OPCs, a nuanced understanding of the deemed date of AGM or Board meeting is imperative for compliance and seamless business operations. Adherence to these regulations not only ensures legal compliance but also underpins the credibility and stability of the business ecosystem.

NIC Launches E-Way Bill 2 Portal for Enhanced GSTN Services on June 1, 2024

"Smooth Transportation, Simple Business."

The National Informatics Centre (NIC) is gearing up to unveil the E-Way Bill 2 Portal (https://ewaybill2.gst.gov.in) on June 1, 2024, as a pivotal enhancement to the Goods and Services Tax Network (GSTN) infrastructure. This new portal will operate alongside the existing e-way Bill main portal (https://ewaybillgst.gov.in), ensuring seamless synchronization of e-way bill details and bolstering operational efficiency.

Key features of the E-Way Bill 2 Portal include:

• Independent Generation and Updates: Users can autonomously generate and update E-Way Bills directly on the portal, granting them greater control over their transactions.

• Web and API Modes: Offering both web and API modes of operations, the portal accommodates diverse user preferences and technical requirements.

• Unified Login Credentials: Taxpayers and logistic operators can access the portal using their login credentials from the main portal, facilitating streamlined access to services.

• Operational Continuity: In case of technical glitches or emergencies on the main portal, users can seamlessly transition to the E-Way Bill 2 Portal to avoid disruptions in their operations.

• Cross-Portal Operations: Users can conduct printing and updating of Part-B of E-Way Bills across both portals, streamlining documentation and compliance management.

• Redundancy Measures: Should the E-Way Bill main portal encounter non-operational issues due to technical reasons, users can update Part-B of E-Way Bills generated on Portal 1 at Portal 2, ensuring uninterrupted operations.

The launch of the E-Way Bill 2 Portal signifies a significant advancement in the reliability and effectiveness of the GSTN ecosystem. For further information and updates, users are encouraged to visit the respective e-way bill portals.

Guide to the Appointment and Role of Independent and Woman Directors

Balancing Interests, Ensuring Integrity

Introduction:

In today's dynamic corporate environment, independent and woman directors play crucial roles in enhancing corporate governance and ensuring ethical standards. These directors serve as pillars of integrity, providing unbiased oversight and strategic guidance. The Companies Act 2013 outlines stringent procedures and qualifications for their appointment, emphasizing their critical role in maintaining transparency and accountability. This guide delves into the appointment processes, duties, tenure, and penalties associated with independent and woman directors, along with practical insights to foster effective corporate governance.

Requirements for Independent Directors

According to the Companies Act 2013:

• All listed public limited companies must have at least one-third of their total directors as independent directors.
• Unlisted public companies should appoint at least two independent directors if they meet any of the following criteria:
  1. Paid-up share capital exceeds Rs.10 crores.
  2. Turnover exceeds Rs.100 crores.
  3. Outstanding loans, debentures, and deposits exceed Rs.50 crores.

Duties of Independent Directors

The guidelines, roles, functions, and duties of independent directors are defined in Schedule IV of the Companies Act, 2013. Key roles and functions include:

1. Independent Judgment: Provide independent judgment on strategic issues, performance, risk management, resources, key appointments, and conduct standards.
2. Objective Evaluation: Offer an objective evaluation of board and management performance.
3. Performance Monitoring: Monitor management performance in meeting goals and report performance accurately.
4. Financial Oversight: Ensure financial information reliability and robust financial controls and risk management systems.
5. Stakeholder Protection: Protect all stakeholders' interests, particularly minority shareholders.
6. Conflict Resolution: Balance stakeholder conflicts and resolve issues between management and shareholders.
7. Remuneration Oversight: Determine appropriate remuneration levels for executives and recommend removal where necessary.
8. Moderation and Adjudication: Act in the company's overall interest during conflicts between management and shareholders.

Qualities of Independent Directors

An independent director should possess skills, experience, and knowledge in one or more of the following domains: finance, law, management, sales, marketing, administration, research, corporate governance, technical operations, or other related disciplines. Essential qualities include:

• Impartiality
• Loyalty
• Decision-making (judgment)
• Professional repute

Appointment Procedures

Independent Directors

Step	Description
Notice and Justification	Issue a notice of the general meeting with an explanatory statement justifying the appointment.
General Meeting and Resolution	Conduct a general meeting and pass a resolution for the appointment.
Disclosure Requirements	Disclose proceedings to the stock exchange within 24 hours and post on the company's website within two working days.
Filing with ROC	File Form MGT-14 within 30 days of the resolution and Form DIR-12 within 30 days of the appointment.
Vacancy Filling	Fill any vacancy within three months from the date of vacancy or the next board meeting, whichever is earlier.

Woman Directors

Step	Description
Consent and Disqualification	Submit Form DIR-2 (consent to act) and Form DIR-8 (disqualification intimation).
Shareholders’ Approval	Obtain shareholders' approval through a resolution in a general meeting.
Disclosure Requirements	Disclose proceedings to the stock exchange within 24 hours and post on the company's website within two working days.
Filing with ROC	File Form MGT-14 within 30 days of the resolution and Form DIR-12 within 30 days of the appointment.
Register Updates	Update the director and key managerial personnel register and the register of contracts (Form MBP-4).
Vacancy Filling	Fill any vacancy within three months from the date of vacancy or the next board meeting, whichever is earlier.

Tenure and Reappointment

Independent Directors

• Initial Term: Appointed for a term of five years.
• Reappointment: Can be reappointed for another five-year term with a special resolution after performance evaluation by the board.
• Maximum Tenure: Cannot hold office for more than two consecutive terms.
• Reappointment Post Tenure: Can be reappointed in the same company after a cooling period of three years.

Woman Directors

• Term: Till the next AGM from the date of appointment, eligible for re-appointment.
• Rotation: Liable to retire by rotation as per Section 152(6).

Penalties for Non-Compliance

Non-Compliance	Penalty
Appointment of Directors	No specific penalty prescribed. General penalty under Section 172 of the Act: Fine ranging from Rs. 50,000 to Rs. 5,00,000 for the company and officers in default.
Appointment of Woman Directors	Section 172 of the Act: Fine ranging from Rs. 50,000 to Rs. 5,00,000 for the company and officers in default for non-compliance with the appointment of a woman director.

Independent Director Data Bank

The Ministry of Corporate Affairs and the Indian Institute of Corporate Affairs (IICA) have introduced an online databank for independent directors, as per the Companies (Appointment and Qualification) Rules, 2019. This databank aims to:

• Develop a repository of independent directors.
• Provide a platform for individuals to acquire knowledge and skills.
• Offer online courses on corporate governance and related topics.
• Facilitate corporate access to qualified independent directors.

Process of Registration

Step	Description
MCA Portal Registration	Access the MCA Portal and enter DIN/PAN/Passport details. Verify using OTP and receive credentials for Databank via email and mobile.
Databank Registration	Log in to the Independent Director's Databank, fill profile details, submit declaration, and pay the subscription fee.
Choose Subscription Plan	Choose from 1 Year (Rs. 5,000), 5 Years, or Lifetime subscription plans.
Online Courses	Enhance knowledge through Board Essentials and Board Practice courses.
Self-Assessment Tests	Pass the Online Proficiency Self-Assessment test within one year of inclusion in the databank.
Corporate Access to Data Bank	Companies can search and download profiles of independent directors by paying the requisite fee.

Services of Independent Director Data Bank

Once registered, individuals can avail the following services:

• Online Courses: Enhance the knowledge base and efficiency of Non-Executive Directors through Board Essentials and Board Practice courses.
• Self-Assessment Tests: Undergo an Online Proficiency Self-Assessment test conducted by IICA. Must clear the assessment within one year from the date of inclusion in the databank. Those with over ten years of director or KMP experience in listed or specified unlisted public companies are exempt.
• Corporate Access to Data Bank: Companies can access and download profiles of independent directors by following specified procedures.

Empanelling of Independent Directors

As per notifications, the Ministry of Corporate Affairs and the Indian Institute of Corporate Affairs (IICA) have introduced a comprehensive online databank for all existing and aspiring Independent Directors. This databank originates from the Companies (Appointment and Qualification) Rules, 2019. Key steps include:

Step	Description
Access MCA Portal	Access the MCA portal at www.mca.gov.in, using DIN, PAN, or Passport for registration.
Redirect to Databank	Redirected to Independent Director's Databank, fill profile details, and choose subscription plan.
Payment and Subscription	Choose from available subscription plans (1 Year, 5 Years, Lifetime) and complete payment.
Services Access	Post-registration, access online courses, self-assessment tests, and corporate access to profiles of independent directors.

Appointment of Woman Directors

The Companies Act, 2013, under Section 149(1) and Companies (Appointment and Qualifications of Directors) Rules, 2014, mandates the following for woman directors:

• Applicability: Every listed company and public companies with paid-up share capital of Rs.100 crore or more, or turnover of Rs.300 crore or more, must appoint at least one woman director.
• Appointment Procedure: Involves consent submission, shareholders' approval, disclosure to stock exchanges, filing with ROC, and register updates.
• Tenure: Till the next AGM, subject to re-appointment and rotation.
• Penalty for Non-Compliance: General penalty under Section 172 of the Act applies.

Conclusion

Independent and woman directors are indispensable to ensuring robust corporate governance and safeguarding stakeholder interests. Their impartial oversight, coupled with their expertise, helps companies navigate complexities while maintaining ethical standards. By adhering to stringent qualifications and fulfilling their duties diligently, these directors contribute significantly to the integrity and success of the corporate sector in India. Practical examples from companies like Infosys, Tata Motors, and Maruti Suzuki illustrate the critical role they play in maintaining corporate integrity and driving ethical governance.