Circular No. 88/07/2019-GST
Page 1 of 8
F. No. CBEC-20/16/04/2018 - GST
Government of India
Ministry of Finance
Department of Revenue
Central Board of Indirect Taxes and Customs
GST Policy Wing
***
New Delhi, Dated the 1st February, 2019
To,
The Principal Chief Commissioners / The Principal Directors General / Chief Commissioners
/ Directors General (All) / Principal Commissioners / Commissioners of Central Tax (All)
Madam/Sir,
Subject: Changes in Circulars issued earlier under the CGST Act, 2017 – Reg.
The CGST (Amendment) Act, 2018, SGST Amendment Acts of the respective States,
IGST (Amendment) Act, 2018, UTGST (Amendment) Act, 2018 and the GST
(Compensation to States) (Amendment) Act, 2018 (hereafter referred to as the GST
Amendment Acts) have been brought in force with effect from 01.02.2019.
2.
Consequent to the GST Amendment Acts, the following circulars issued earlier under
the CGST Act, 2017 are hereby amended with effect from 01.02.2019, to the extent detailed
in the succeeding paragraphs.
3.
Circular No. 8/8/2017 dated 04.10.2017
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
Circular No. 88/07/2019-GST
Page 2 of 8
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.
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.
4
Circular No. 38/12/2018 dated 26.03.2018
This circular is revised in view of the amendment carried out in section 143 of the
CGST Act, 2017 vide section 29 of the CGST (Amendment) Act, 2018 empowering the
Commissioner to extend the period for return of inputs and capital goods from the job
Circular No. 88/07/2019-GST
Page 3 of 8
worker. Further on account of amendment carried out in section 9(4) of the CGST Act, 2017
vide section 4 of the CGST (Amendment) Act, 2018 done in relation to reverse charge,
certain amendments to the Circular are required. Accordingly, the original and the amended
relevant para of the circular are detailed hereunder.
4.1
Original Para 2.
As per clause (68) of section 2 of the CGST Act, 2017………….. Subsequently, on
completion of the job work (by the last job worker), the principal shall either bring back the
goods to his place of business or supply (including export) the same directly from the place of
business/premises of the job worker within one year in case of inputs or within three years in
case of capital goods (except moulds and dies, jigs and fixtures or tools).
4.2 Amended Para 2.
As per clause (68) of section 2 of the CGST Act, 2017, “job work” means any
treatment or process undertaken by a person on goods belonging to another registered person
and the expression “job worker” shall be construed accordingly. The registered person on
whose goods (inputs or capital goods) job work is performed is called the “Principal” for the
purposes of section 143 of the CGST Act. The said section which encapsulates the
provisions related to job work, provides that the registered principal may, without payment
of tax, send inputs or capital goods to a job worker for job work and, if required, from there
subsequently to another job worker and so on. Subsequently, on completion of the job work
(by the last job worker), the principal shall either bring back the goods to his place of
business or supply (including export) the same directly from the place of business/premises
of the job worker within the time specified under section 143.
4.3
Original Para 3.
It may be noted ………. Moreover, if the time frame of one year / three years for
bringing back or further supplying the inputs / capital goods is not adhered to, the activity of
sending the goods for job work shall be deemed to be a supply by the principal on the day
when the said inputs / capital goods were sent out by him. Thus, essentially, sending goods
for job work is not a supply as such, but it acquires the character of supply only when the
inputs/capital goods sent for job work are neither received back by the principal nor supplied
further by the principal from the place of business / premises of the job worker within
one/three years of being sent out. …. ……cast on the principal.
4.4
Amended Para 3.
