Abolishment of GST Rule 96(10) and its effects on Export
Rule 96(10) of the Central Goods and Services Tax (CGST) Rules, 2017, placed restrictions on exporters from claiming refunds on Integrated Goods and Services Tax (IGST) paid on exports. This rule applied if the exporters or their suppliers had availed certain benefits. The rule was intended to prevent exporters from using input tax credit (ITC) meant for domestic supplies to offset IGST for their exports, and to avoid double benefits where exporters claimed exemptions on inputs and also claimed a refund of IGST on exports.
Key Takeaways
- Rule 96(10) of the CGST Rules restricted exporters from claiming IGST refunds if they or their suppliers availed certain benefits.
- The rule was declared ultra vires (unconstitutional) by the Kerala High Court.
- The government abolished the rule through Notification No. 20/2024, simplifying refund procedures.
- The removal of Rule 96(10) reduces capital blockages and boosts export competitiveness.
- Exporters can now claim IGST refunds without previous limitations, enhancing the ease of doing business.
In response to these issues, exporters contested the validity of Rule 96(10) in various High Courts. The rule has since been omitted.
What was Rule 96(10) and How did it create problems for Exporters
Rule 96(10) of the Central Goods and Services Tax (CGST) Rules, 2017, placed restrictions on exporters from claiming refunds on Integrated Goods and Services Tax (IGST) paid on exports. This rule applied if the exporters or their suppliers had availed certain benefits. The rule was intended to prevent exporters from using input tax credit (ITC) meant for domestic supplies to offset IGST for their exports, and to avoid double benefits where exporters claimed exemptions on inputs and also claimed a refund of IGST on exports.
