GST and US Trade: What Indian Exporters Need to Know
If you ship goods from India to the United States, GST is probably the first tax term you hear about. The good news? Exports are zero‑rated under Indian GST law, which means you don’t charge GST to your US buyers. The trick is to keep the paperwork tight so you can claim the input tax credit or a refund when the tax you paid on inputs exceeds the tax you collected.
Why Indian Exports to the US Are Zero‑Rated
When you sell a product to a customer in the US, the transaction is classified as an export under the GST Act. That makes the supply taxable at 0 % GST. You don’t add GST to the invoice, but you can still recover the GST you paid on raw materials, freight, packaging, and other inputs. To prove the export, you need a shipping bill, bill of export, or an invoice that clearly shows the destination as the United States.
Most exporters also file a customs duty clearance document. The customs authority stamps the bill of export, confirming that the goods left Indian territory. Keep that stamp; it’s the key evidence if the tax officer asks for proof.
Getting Your GST Refund or Credit
After you’ve filed your GSTR‑1 and GSTR‑3B, the GST portal will calculate any excess input tax. If the credit is larger than your output tax, you have two options: carry the credit forward to the next tax period or apply for a refund. For export‑related refunds, the process is straightforward because the output tax is zero.
Step 1: Ensure all export documents (shipping bill, invoice, customs clearance) are uploaded in the GST portal.
Step 2: Reconcile your Input Tax Credit (ITC) in GSTR‑3B. The system will automatically show a refundable amount if you have excess ITC.
Step 3: Submit a refund application through the portal, attaching the export documents.
Step 4: The tax officer reviews the claim. If everything matches, the refund is credited to your bank account within 30‑45 days.
Make sure the bank details in your GST profile are up to date; a mismatch can delay the refund.
Even though the US doesn’t have GST, American buyers often wonder about tax implications. Reassure them that the sale is tax‑free on the Indian side, and they’ll handle any US sales‑tax obligations locally.
Quick tips to avoid headaches:
Keep digital copies of every export document for at least six years.
Match the invoice number with the shipping bill exactly – any discrepancy can trigger a notice.
File your GSTR‑1 and GSTR‑3B on time; delays can block your refund.
If you use a freight forwarder, ask them to provide the customs clearance stamp in electronic form.
By following these steps, you turn GST from a mystery into a cash‑flow booster. Exporting to the US is already a big opportunity; mastering the GST rules ensures you keep more of the money you earn.
Ever wondered if GST exists in the USA? While India relies on Goods and Services Tax, the U.S. does things differently. This article breaks down how America handles sales taxes, uncovers why there's no federal GST, and compares both systems to help you understand what to expect in cross-border trade. You'll get practical tips plus some fun facts along the way. No jargon, just real talk.
