#Export to Nepal & Bhutan# By SN Panigrahi I had received many Queries, Questions & Comments from many readers, thus I thought it’s my Responsibility to clarify those Doubts. Attempt is made to Clear most of the Doubts Point wise Point regarding #Export to Nepal & Bhutan#

1. 1SN Panigrahi

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SN Panigrahi is a Versatile Practitioner, Strategist, Energetic Coach, Learning Enabler & Public Speaker.
He is an International-Corporate Trainer, Mentor & Author
He has diverse experience and expertise in Project Management,
Contract Management, Supply Chain Management, Procurement,
Strategic Sourcing, Global Sourcing, Logistics, Exports & Imports,
Indirect Taxes – GST etc.
He had done more than 150 Workshops on above
He is an Engineer + MBA +PGD ISO 9000 / TQM with around 29 Yrs of
Experience worked in Aditya Birla, Jindal, Bhusan, Somani Groups etc
He is a certified PMP® from PMI (USA) and become PMI India
Champion
Also a Certified Lean Six Sigma Green Belt from Exemplar Global
Trained in COD for 31/2 Yrs. on Strategy & Leadership
GST Certified – MSME – Tech. Dev. Centre (Govt of India Organization)
ZED Consultant – Certified by QCI – MSME (Govt of India Organization)
Member Board of Studies, IIMM
Co-Chairman, Indirect Tax Committee, FTAPCCI
Empanelled Faculty in NI MSME
He has shared his domain expertise in various forums as a speaker & presented a number of papers in various national and
international public forums and received a number of awards for his writings and contribution to business thoughts.
SN Panigrahi
9652571117
snpanigrahi1963@gmail.com
Hyderabad

3. 3SN Panigrahi

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Definition
of Export
Treated as Zero Rated
Export of Services
Section 2 (6) of IGST Act, 2017 :
(i) The Service Provider is situated in India;
(ii) The Recipient of Service is situated Outside India;
(iii) The Place of Supply of that service is also Outside India;
(iv) The Payment for such service has been received by the supplier of
service in Convertible Foreign Exchange or in Indian rupees
wherever Permitted by the Reserve Bank of India; and
(v) The supplier of service and the recipient of service are Not Merely
Establishments of a Distinct Person in accordance with Explanation
1 in section 8; .
Export of Goods
Section 2 (5) of IGST Act, 2017 :
“Taking Goods out of India to a place outside India”
SN Panigrahi

5. SN Panigrahi 5
Amendment to u/s 2(6) : Following added to Clause (iv) “or in Indian rupees wherever Permitted
by the Reserve Bank of India”
Commentary For Amendment u/s 2(6) –
There are certain payments received in INR through Nostro/Vostro Accounts for Goods/Services
supplied abroad. The payment for such transactions though such accounts are received in INR.
Here is an explanation to highlight how a Nostro and a Vostro account works in the most simplified
terms. Nostro in Latin literally means ours and Vostro means yours.
Take a bank in India, Bank A for example. A gets a lot many remittances and trade related money sent
home from Japan to India. However, A does not have a banking license in Japan.
So A reaches out to a bank like Bank of Japan (say) and asks them to open a bank account in A’s
name, in Yen. On this, A can do all sorts of transactions as if they were themselves present in Japan
and operating this account.
Another way to look at it is:
A’s Yen Account in Bank of Japan is A’s Nostro Account OR
Bank of Japan has a Vostro account for Ain Yen with Bank of Japan
When the situation is reversed, if Bank of Japan has an account with A in India in INR, then for A this
would be Bank of Japan’s Vostro Account.
IGST (Amendment) Act, 2018
No. 32 OF 2018; [29th August, 2018.]

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As per Section 2 (5) of IGST Act, 2017, Export of Goods means
“Taking out of India to a place outside India”.
No Condition attached for Receiving Payment either in Indian Currency or in any other Currency.
Therefore once the Goods are Taken Out of India from India, it is Treated as Exports.
Supplier in
India
(Exporter)
Recipient
In Nepal /
Bhutan
(Importer)
SN Panigrahi

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Indian Supplier
Recipient
In Nepal / Bhutan
(Importer)
Chinese
Supplier
As per Section 2 (5) of IGST Act, 2017, Export of Goods means
“Taking Goods out of India to a place outside India”.
Since Goods are Not taken Out of India Physically, but Moved from China, it is not Fulfilling Condition
in the definition, therefore it is Not Treated as Exports.
SN Panigrahi

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Export of goods to Nepal or Bhutan fulfils the condition of GST Law regarding taking goods out of
India. Hence, export of goods to Nepal or Bhutan will be treated as zero rated and consequently will also
qualify for all the benefits available to zero rated supplies under the GST regime.
LUT for supplies of goods to Nepal or Bhutan
It is clarified that the acceptance of LUT for supplies of Goods or Services to Nepal or Bhutan will be
permissible irrespective of whether the payments are made in Indian currency or convertible foreign
exchange as long as they are in accordance with the applicable RBI guidelines.
Indian Supplier
(Exporter)
Recipient
In Nepal / Bhutan
(Importer)
SN Panigrahi

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Changes in Circular No. 8/8/2017 dated 04.10.2017 issued earlier under the CGST Act, 2017 vide
Circular No. 88/07/2019-GST; Dated the 1 st February, 2019
The circular is revised in view of the amendment carried out in section 2(6) of the IGST Act, 2017 vide section 2 of the IGST
(Amendment) Act, 2018 allowing realization of export proceeds in INR, wherever allowed by the RBI. Accordingly, the original
and the amended relevant para of the circular are detailed hereunder.
3.1 Original Para 2(k) : Realization of export proceeds in Indian Rupee:
Attention is invited to para A (v) Part- I of RBI Master Circular No. 14/2015-16 dated 01stJuly, 2015 (updated as on 05th
November, 2015), which states that “there is no restriction on invoicing of export contracts in Indian Rupees in terms of
the Rules, Regulations, Notifications and Directions framed under the Foreign Exchange Management Act, 1999. Further, in
terms of Para 2.52 of the Foreign Trade Policy (2015-2020), all export contracts and invoices shall be denominated either
in freely convertible currency or Indian rupees but export proceeds shall be realized in freely convertible currency.
However, export proceeds against specific exports may also be realized in rupees, provided it is through a freely
convertible Vostro account of a non-resident bank situated in any country other than a member country of Asian
Clearing Union (ACU) or Nepal or Bhutan”.
Accordingly, it is clarified that the acceptance of LUT for supplies of goods to countries outside India Nepal or Bhutan
or SEZ developer or SEZ unit will be permissible irrespective of whether the payments are made in Indian currency
or convertible foreign exchange as long as they are in accordance with the applicable RBI guidelines. It may also be noted
that the supply of services to SEZ developer or SEZ unit under LUT will also be permissible on the same lines.
The supply of services, however, to Nepal or Bhutan will be deemed to be export of services only if the payment for
such services is received by the supplier in convertible foreign exchange.

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Changes in Circular No. 8/8/2017 dated 04.10.2017 issued earlier under the CGST Act, 2017 vide
Circular No. 88/07/2019-GST; Dated the 1 st February, 2019
3.2 Amended Para 2(k)
Realization of export proceeds in Indian Rupee:
Attention is invited to para A (v) Part- I of RBI Master Circular No. 14/2015-16 dated 01stJuly, 2015 (updated as on 05th
November, 2015), which states that “there is no restriction on invoicing of export contracts in Indian Rupees in terms of
the Rules, Regulations, Notifications and Directions framed under the Foreign Exchange Management Act, 1999. Further, in
terms of Para 2.52 of the Foreign Trade Policy (2015-2020), all export contracts and invoices shall be denominated either
in freely convertible currency or Indian rupees but export proceeds shall be realized in freely convertible currency.
However, export proceeds against specific exports may also be realized in rupees, provided it is through a freely
convertible Vostro account of a non-resident bank situated in any country other than a member country of Asian
Clearing Union (ACU) or Nepal or Bhutan”.
Further, attention is invited to the amendment to section 2(6) of the IGST Act, 2017 which allows realization of export
proceeds of services in INR, wherever allowed by the RBI.
Accordingly, it is clarified that the acceptance of LUT for supplies of goods or services to countries outside India or
SEZ developer or SEZ unit will be permissible irrespective of whether the payments are made in Indian currency or
convertible foreign exchange as long as they are in accordance with the applicable RBI guidelines.

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Circular No.
8/8/2017-GST;
Dated the 4th
October, 2017
Treated as Zero
Rated
(Export)
Notification No.
42/2017- Integrated
Tax(Rate) dated
27th October, 2017
Notification No.
55/2017 dated
November 15, 2017
Treated as Zero
Rated
(Export)
SN Panigrahi
Circular Changed
vide Circular No.
8/8/2017 dated
04.10.2017

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Exemption to Supply of Services having place of supply in Nepal
and Bhutan, against Payment in Indian Rupees
vide Notification No. 42/2017- Integrated tax(Rate) dated 27th October, 2017 made the amendment in
the Notification No. 9/2017- Integrated Tax (Rate), dated the 28th June, 2017 whereby a new entry have
been inserted in the exemption notification, namely, Supply of services having place of supply in Nepal or
Bhutan, against payment in Indian Rupees.
Further vide Notification No. 55/2017 dated November 15, 2017, Explanation has been inserted in Rule 43,
after sub-rule (2), to provide for exclusion of value of supply of services to Nepal and Bhutan, against payment in
Indian Rupees, at the time of calculating value of exempt supplies. In a nutshell, it can be said that input tax
credit in respect of services supplied to Nepal and Bhutan, against payment in Indian Rupees, need not
to reverse under Rule 42 and Rule 43 respectively.
Indian Supplier
(Exporter)
Recipient
In Nepal / Bhutan
(Importer)
SN Panigrahi

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However, the definition of ‘export of services’ in the GST Law requires that the
payment for such services should have been received by the supplier of services
in convertible foreign exchange.
Exemption on Supply of Services Associated with Transit Cargo to Nepal
and Bhutan
To remove the confusion a Notification No. 30 / 2017, Central Tax (Rate),
29th September, 2017 was released to amend the Notification No. 12/2017-
Central Tax (Rate), dated the 28th June, 2017 by exempting tax on Supply of
services associated with transit cargo to Nepal and Bhutan (landlocked
countries). But this notification served limited purpose.
Export of Services Associated with
Transit Cargo to Nepal or Bhutan
SN Panigrahi

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A client based out of Nepal / Bhutan, send his products to a Registered
Person in India for Testing / Repair. Testing / Repair is done in India. Kindly
clarify if GST is payable / applicable on the same?
Indian Service
Provider
Recipient
In Nepal / Bhutan
(Importer)
Goods Temporarily Imported into India for Testing / Repairs and are Exported After Testing /
Repairs, the Place of Supply shall be Outside India. Subject to other Conditions of Definition as per
Section 2 (6) of IGST Act, 2017 is Satisfied, it is Treated as Export of Service (Even though
Consideration is Received in India Currency).
Place of Supply :
Second Proviso to Sec
13(3)(a) of IGST Act
SN Panigrahi

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IGST (Amendment) Act, 2018
No. 32 OF 2018
[29th August, 2018.]
Sec 13(3)(a) of IGST Act
The place of supply of the following services shall be the location where the services are actually
performed, namely:-
(a) services supplied in respect of goods which are required to be made physically available by the
recipient of services to the supplier of services, or to a person acting on behalf of the supplier of
services in order to provide the services:
Provided that when such services are provided from a remote location by way of electronic means, the
place of supply shall be the location where goods are situated at the time of supply of services:
Provided further that nothing contained in this clause shall apply in the case of services supplied
in respect of goods which are temporarily imported into India for repairs and are exported after
repairs without being put to any other use in India, than that which is required for such repairs;
Commentary – Place of supply in case of any treatment or process (which may not come within
the four corners of the definition of job work) done on goods temporarily imported into India and
then exported without putting them to any other use in India, to be outside India.

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Place of supply of services where Supplier or Recipient is Outside India (Nepal / Bhutan)
Shipper from Nepal / Bhutan, Export to outside India. In that case some operation process
done in Kolkata, India. Whether the Services Provided by Service Provider (C&F Agent /
Forwarder) in India to Shipper in Nepal / Bhutan is Treated as Export of Service?
As per Sec 13(2) of IGST Act, the Place of Supply of Services shall be the Location of the
Recipient of Services
Since the Services are Provided from India to the Recipient in Nepal / Bhutan, the Place of
Supply is Location of the Recipient of Services, ie Outside India. Subject to other Conditions
of Definition as per Section 2 (6) of IGST Act, 2017 is Satisfied, it is Treated as Export of
Service (Even though Consideration is Received in India Currency).
Service Provider
In India
Service Recipient
Outside India
(Nepal / Bhutan)
Providing Service to Recipient Outside India
Place of Supply Outside India
SN Panigrahi

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We are Providing Services of Transportation of Goods from India to Nepal / Bhutan. Whether these
Services are Treated as Export of Services?
As per Sec 13(9) of IGST Act, the Place of Supply of Services of Transportation of Goods, other than by
way of mail or courier, shall be the Place of Destination of Such Goods.
Since the Services of Transportation of Good provided from India to the Recipient in Nepal / Bhutan,
the Place of Supply is Outside India. Subject to other Conditions of Definition as per Section 2 (6) of
IGST Act, 2017 is Satisfied, it is Treated as Export of Service (Even though Consideration is Received
in India Currency).
Service Provider
In India
Service Recipient
Outside India
(Nepal / Bhutan)
Providing Services of Transportation of Good
Place of Supply
Place of Destination of Such Goods
Outside India
SN Panigrahi

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For Export to Nepal / Bhutan how to make the Invoice? Do we need to charge
IGST or we need to make under L.U.T without Paying GST? Whether we can
get Export Refunds?
Export
To Nepal
/ Bhutan
Option – 1
Sec 16. (3)(a)
Without Payment of
IGST
Under Bond / LUT
FORM GST RFD-11
With Payment of
IGST
Option – 2
Sec 16. (3)(b)
Claim ITC Refund
Rule 96A
Form RFD 01 A
Refund of IGST
Rule 96
Export of Goods : No
Separate Application
Export of Services: Separate
Application RFD 01A
SN Panigrahi

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Electronic Cargo Tracking System (ECTS)
Customs Procedure for Export of Cargo in Containers and Closed bodied Trucks from ICDs/CFSs
through Land Customs Stations (LCSs) for Export to Nepal, Bangladesh, Bhutan Adoption of ECTS
Seal.
To Know about it go through the below Article Published in Taxguru
Procedure for Export via Land Customs Stations to Nepal, Bangladesh & Bhutan
https://taxguru.in/custom-duty/procedure-for-export-via-land-customs-stations-to-nepal-bangladesh-
bhutan.html
SN Panigrahi

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GST on Export of Services to Nepal and Bhutan
To Know about it go through the below Article Published in Taxguru
GST on Export of Services to Nepal and Bhutan
https://taxguru.in/goods-and-service-tax/gst-on-export-of-services-to-nepal-and-bhutan.html/comment-page-
1#comment-2054790

21. 21SN Panigrahi

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23. Contact Details:
SN Panigrahi
9652571117
snpanigrahi1963@gmail.com 23