The Central Board of Indirect Taxes and Customs (CBIC) vide notification number 27/2023 issued on 1st July 2023 has notified the implementation of Section 123 of the Finance Act 2021 which amended the Section 16 of the Integrated Goods and Services Tax Act (IGST), 2017. The same will come into force on 1st October 2023.
The notification states that “—In exercise of the powers conferred by clause (b) of sub-section (2) of section 1 of the Finance Act, 2021 ( 13 of 2021), the Central Government hereby appoints the 1st day of October, 2023, as the date on which the provisions of section 123 of the said Act shall come into force.”
The amendment in Section 16 of IGST Act, which mentions about Zero rated Supply, as per Finance Act 2021:
In the Integrated Goods and Services Tax Act, 2017, in section 16, ––
(a) in sub-section (1), in clause (b), after the words “supply of goods or services or both”, the words “for authorised operations” shall be inserted;
(b) for sub-section (3), the following sub-sections shall be substituted, namely:––
“(3) A registered person making zero rated supply shall be eligible to claim refund of unutilised input tax credit on supply of goods or services or both, without payment of integrated tax, under bond or Letter of Undertaking, in accordance with the provisions of section 54 of the Central Goods and Services Tax Act or the rules made thereunder, subject to such conditions, safeguards and procedure as may be prescribed:
Provided that the registered person making zero rated supply of goods shall, in case of non-realisation of sale proceeds, be liable to deposit the refund so received under this sub-section along with the applicable interest under section 50 of the Central Goods and Services Tax Act within thirty days after the expiry of the time limit prescribed under the Foreign Exchange Management Act, 1999 for receipt of foreign exchange remittances, in such manner as may be prescribed.
(4) The Government may, on the recommendation of the Council, and subject to such conditions, safeguards and procedures, by notification, specify––
(i) a class of persons who may make zero rated supply on payment of integrated tax and claim refund of the tax so paid;
(ii) a class of goods or services which may be exported on payment of integrated tax and the supplier of such goods or services may claim the refund of tax so paid.”
The effect of the notification of the CBIC is that only a certain class of person or class of goods or services shall be allowed to claim the refund on exports with payment of integrated tax paid.
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