Export Invoices: A Guide to Seamless Business Compliance

Export invoices are crucial records in international trade since they serve as proof of transactions and speed up customs clearance. They include vital seller and buyer statistics, product or service information, tax rates, etc. Understanding export invoicing is essential for companies to operate legally, reap the benefits, and maintain smooth operations in the global economy.

All businesses must comply with certain Goods and Services Tax regime requirements. Amongst these requirements, invoicing is very important. An invoice is a document that carries the evidence of a transaction and contains information like the seller’s and buyer’s address, HSN code, rate of duty, quantity sold, date, etc. A business cannot receive an input tax credit without a proper invoice. Therefore, every business owner must remember all the details required to be furnished in an invoice to avoid penalties and enjoy the maximum benefit under the Goods and Services Tax Act.

Let us go further and learn more about exports and export invoices.

Did you know? India has been actively promoting exports to generate wealth and boost trade. The export invoice is a significant document in facilitating and regulating international trade transactions, enabling the government to track exports, determine the value of goods, and calculate applicable taxes.

What Do You Mean by “Export”?

When the seller of goods or services is located in India, and the buyer is located outside India, such a condition is referred to as an “Export of Goods or Services”. The Government of India recognises exports as the means of wealth generation and trade promotion in India. Exports are not only encouraged but also incentivised. Thus, sellers are not required to pay GST when they export goods out of India. However, the Government discourages the export of certain goods like precious stones and metals, and any exporter dealing in such goods must pay tax even while exporting them. The Goods and Services Tax Act is a destination-based tax, meaning that duty is levied where goods or services are consumed. Thus, for this reason, it becomes necessary to classify the location of the supplier and the place of supply. If the location of the supplier and the place of supply is in the same state, then it is an Intrastate supply; if these two are in different states, then it is an interstate supply.

For an intrastate supply, a supplier charges a Central Goods and Service Tax and State Goods and Service Tax, and for an interstate supply, Integrated Goods and Service Tax is charged. Under the purview of GST, an export is considered an interstate supply.

What Is an Export Invoice?

An export invoice is documentary evidence containing the details of goods or services, amount, place of supplier and that of the recipient, rate of tax charged, quantity of goods sold (if any), etc. Hence, an export invoice format is similar to a normal tax invoice with a few additional details.

Why Should You Issue an Export Invoice?

Apart from legal and compliance mandates, an export invoice is issued because of the following reasons:

An export invoice is a vital shipping document that helps the Customs Officer to identify the goods being exported.
If the goods are lost in the high sea, this invoice serves as documentary proof for raising an insurance claim.
An importer may require this export invoice to clear goods from the Customs Station of his own country.
An export invoice enables the governmental authorities to determine the actual value of goods and calculate the actual rate of tax to be paid.
If the buyer returns the goods for repairs, an export invoice helps the seller identify his goods so that no duplicate item has been sent to him.
If the exporter cannot repatriate the payment for the goods sold or the services supplied, the export invoice serves as a document that can be applied to the RBI for its guidance.

Indian Regulations on Exports and Invoices

The Goods and Services Tax Act recognises three export forms. They are:

Types of Exports	Particulars	Whether Tax is Required to be paid?
Export under Bond or Letter of Undertaking	This export is made without the payment of IGST. The exporter has to furnish a bond or a letter of undertaking mandatorily. Since there is no payment of IGST, there is no refund to be taken in this case.	No, and thus, no refund can be claimed.
Export with the payment of IGST	In this case, the exporter must pay the applicable IGST on the export of goods. He can later claim a refund on the amount of tax paid.	Yes. After the tax payment, the exporter can claim a refund on the amount of tax paid and unutilised credit in his electronic credit ledger.
Export to Special Economic Zones	The Government has identified certain regions of the country as Special Economic Zones for trade promotion in these areas. The supply of goods and services to these special economic zones is considered an export. This supply gets the same benefits and incentives as export.	No. These supplies are considered to be zero-rated supplies and attract a nil rate of tax.

Types of Exports	Particulars	Whether Tax is Required to be paid?
Export under Bond or Letter of Undertaking	This export is made without the payment of IGST. The exporter has to furnish a bond or a letter of undertaking mandatorily. Since there is no payment of IGST, there is no refund to be taken in this case.	No, and thus, no refund can be claimed.
Export with the payment of IGST	In this case, the exporter must pay the applicable IGST on the export of goods. He can later claim a refund on the amount of tax paid.	Yes. After the tax payment, the exporter can claim a refund on the amount of tax paid and unutilised credit in his electronic credit ledger.
Export to Special Economic Zones	The Government has identified certain regions of the country as Special Economic Zones for trade promotion in these areas. The supply of goods and services to these special economic zones is considered an export. This supply gets the same benefits and incentives as export.	No. These supplies are considered to be zero-rated supplies and attract a nil rate of tax.

When Should You Raise an Export Invoice?

The Central Goods and Services Tax Act specifies the time limit the seller has to raise an invoice. Thus, according to Section 31 of the CGST Act, 2017:

When the supply involves the movement of the goods:
- The invoice should be issued before or at the time of removal of the goods for delivery.
When the supply involves the provision of services:
- The invoice should be issued before the time of supply of services or within a specified time (60 days) after the provision of services.
For goods sent for sale on an approval basis:

In this case, the invoice is issued at the earliest of the following two cases:

If the approval has been received within 6 months, the invoice date should be the date of approval.
If the approval has not been received within 6 months and the buyer has not intimated his refusal, then the date of invoice shall be the date of expiry of the 6 months.

When Should the Export Proceeds be Realised?

According to the Foreign Exchange Management Act, an exporter must realise and repatriate export proceeds to India within nine months of making the export. This provision is crucial to maintaining the stability of the foreign exchange market, ensuring timely foreign currency inflows into the nation, and supporting the overall balance of payments.

In addition to satisfying legal requirements, returning export revenues within the allotted time frame strengthens India's ability to efficiently manage its needs for foreign commerce and financing by enhancing the stability and strength of its foreign exchange reserves. Additionally, it encourages trust between trading partners and enables more effortless business interactions on the international market.

Contents and Format of the Export Invoice

A typical export invoice contains the following details.

Details	Particulars
Credentials of the Supplier	This includes the name, address, and contact details like the Supplier's email addresses and phone numbers.
Credentials of the Buyer	This includes the name, address and contact details like the Recipient's email addresses and phone numbers.
GSTIN of Supplier	This is the unique number assigned to all taxable persons who have registered themselves under the GST Act
Details of Goods or Services	This field contains the particulars of the goods sold or the services supplied, their rates, quantities (in the case of goods) and their amounts
Invoice Date	It is the date on which the invoice has been generated
Invoice Number	It is a unique combination of numbers and alphabets that have been serially arranged and help record the various transactions.
Conversion Rate	Since export involves a currency other than the Indian rupee, this rate denotes the conversion of the Indian rupee into another currency or vice versa
Amount	This is the total value of the invoice, along with the amount of insurance, freight and taxes
Type of Export	Whether the export is under a bond or a letter of undertaking, to a Special Economic Zone or after the payment of IGST
Details of Shipping Bill	A shipping Bill is a detailed document filed with the Customs Officer to declare the type and value of goods to be exported.
Signature	A physical or digital signature of the supplier that acts as a check whether the transaction has been authorised or not
Notes	Any notes by the supplier to the importer (if any)

Use of Currency in the Export Invoice

Export occurs when India supplies its goods or services to other countries. As we know, every country has its currency whose value differs from that of the Indian currency.

Thus, there have been certain guidelines from the RBI in the matter:

The export invoices are not required to be in foreign currency. They can be in Indian currency too.
These invoices can be produced for freely convertible foreign currency or Indian rupee.
Exporters must collect the sale proceeds in free convertible foreign currency.

Packing and Shipping in an Export Invoice

International shipments often risk being listed down against incorrect cargo. Therefore, The export invoice must contain information to help recognise the consignment. These include:

Container number
Container seal number
Identification marks such as Shipping Mark
Description of Goods along with their HSN numbers, rates, quantities, units of measurement, etc.
Port of origin and destination
Country of origin and destination

Conclusion

In conclusion, it is critical for companies engaged in international trade to comprehend export invoicing. An export invoice is a crucial shipment document, facilitates customs clearance, and offers transaction proof for various uses. Adhering to the Goods and Services Tax Act is crucial when generating export invoices. There are numerous recognised export kinds, and each has unique tax ramifications. Key components of an export invoice include timely billing, the realisation of export revenues, and the inclusion of relevant information, including credentials of the supplier and customer, GSTIN, goods/services information, shipping details, and currency considerations. While e-invoicing could be essential for some companies, it is still feasible to cancel an export invoice if necessary.

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Everything You Must Know About Export Invoices