[Samurai]

Originally Posted by carguy2021

Question regarding GST refunds. As we will be filing 0% for export invoices without any payment with LUT, to get refund from GST authorities for any input credits, do we mandatorily need BRC or does FIRC/remittance advice from HDFC work as supporting documents. Can you please shed some light?

Sorry, I missed seeing this post. Since you never charged GST in your export invoices, where is the question of getting ITC? This is the bane of being a non-STPI registered company. If you were 100% export unit under STPI, you can tell your vendors not to charge GST. But as non-STPI, you have to pay local bills with GST. And you won't get to recover it unless you have domestic sales. If you don't plan to have domestic sales, there is no way to recover the GST.

Originally Posted by agbenny

When we get P0807 FIRC from the bank which process FIRC, our bank (in our case HDFC) is finding it difficult to close it at their end in EDPMS. Is there any reason for this? HDFC is OK with P0802, but as a registered non-STPI member it is not possible, and P0807 is the way. Any idea/help/thoughts on this?

The bank that issues the FIRC must close it under EDPMS. If you get P0802, there is nothing to close, since it is not an export at all. P0802 is foreign payment for service rendered in India, so it is not an export.

Don't ask for FIRC from the intermediate bank that is used by Payoneer. Ask them to give NOC to HDFC, with P0807 as the purpose code and a declaration that they have not issued FIRC. If the intermediate bank has issued FIRC, then you must close the EDPMS entry with them, which may not be possible since you are not their customer. Also, during STPI registration you would have specified your HDFC branch as your authorised dealer for inward remittance. Therefore, remittance from another bank may not be acceptable.

It is really tragic that RBI has not issued clear guidance regarding foreign remittance in case of software exports. This has resulted in so much confusion for software exporters, who are ultimately held responsible for the mess.

[Bhargav7]

Originally Posted by carguy2021

Question regarding GST refunds. As we will be filing 0% for export invoices without any payment with LUT, to get refund from GST authorities for any input credits, do we mandatorily need BRC or does FIRC/remittance advice from HDFC work as supporting documents. Can you please shed some light?

Originally Posted by Samurai

Sorry, I missed seeing this post. Since you never charged GST in your export invoices, where is the question of getting ITC? This is the bane of being a non-STPI registered company. If you were 100% export unit under STPI, you can tell your vendors not to charge GST. But as non-STPI, you have to pay local bills with GST. And you won't get to recover it unless you have domestic sales. If you don't plan to have domestic sales, there is no way to recover the GST.

If it is an STPI unit, you have to ask your vendors to give invoices without GST and under LUT. However, for the rest of the entities, you can claim a refund of the ITC you pay on input services and goods. This includes those who are registered with STPI as a non-STPI unit. You need to file form RFD-01 and the refund is auto-calculated based on a formula.

For documentation, you need the BRC if the purpose code is P0807. For the rest of the cases, an FIRC would suffice.

[Samurai]

Originally Posted by Bhargav7

This includes those who are registered with STPI as a non-STPI unit. You need to file form RFD-01 and the refund is auto-calculated based on a formula.

Oh, you can get refund without domestic sales?

There was a long discussion in another thread on this question, and the answer was mostly no.

https://www.team-bhp.com/forum/shift...ml#post5642748 (Calling Lawyers & CAs on this forum to provide free consultations)

[Bhargav7]

Originally Posted by Samurai

Oh, you can get refund without domestic sales?

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Very much. There are mainly two instances where input tax refund can be claimed.

1. Exporters of goods or services, irrespective of whether they have any domestic sales. This is the formula for refund -

Amount of Refund = [ Net ITC x (Turnover of zero-rated supply of goods and services) ] ÷ Adjusted Total Turnover

2. Inverted duty structure - Where the duty on output goods is less than the duty on the input goods. This is more for manufacturers of very specified products and may not be so relevant for the forum here.

Here is an article detailing the procedural aspects.

https://cleartax.in/s/refund-claims-...or-tax-and-itc

In case someone missed this, now is the time you should claim refunds. You can claim for the last two years and then make it an annual process after that.

[mitsu_san_4488]

Thank You so much for the detailed post, clears up so many ambiguities involved in this complicated process. I am a sole proprietor freelancer doing this for the last 2 yrs using P0802 like many other folks here. What's the best way forward? Does one register and comply moving forward or go about getting the last 2 years worth of purpose codes changed? i have seen elsewhere that there is a condonation process, and penalties involved i'm not sure if RBI is imposing harsh penalties yet.

[carguy2021]

Originally Posted by Samurai

However, whenever you receive inward remittance and sofex filing is approved, you need to regularize that remittance by submitting that to the bank. I have attached the export regularization form too. You need to submit this along with Certified softex form, STPI certificate, invoice & FIRC, both in soft copy via email, and hard copy via courier.

All these have to be done on your company letterhead.

Came here to thank you again. I got SOFTEX registration approved few months back and then SOFTEXs approved. Finally got in touch with HDFC trade department who assisted in getting started with the BRC forms and documentations. Submitted hard copy directly and sent soft copy via email as you suggested even though they didn't ask for.

For each (invoice/remittance) documentation processing they are charging 1100+ gst and not sure if BRC is additional cost as everything is getting debited from the account. PDF received in the email says - EXPORT COLLECTION BILL and mentions these charges.

Are they doing the correct process and is this cost expected?

[Samurai]

Originally Posted by carguy2021

Are they doing the correct process and is this cost expected?

Yes, they do charge for clearing them from the EDPMS.

[carguy2021]

Originally Posted by Samurai

Yes, they do charge for clearing them from the EDPMS.

Thank you. Are these charges in the range 1100+ GST? And additional for issuing BRC.

Surprised they didn't mention when I met them in person.

[Samurai]

Originally Posted by carguy2021

Thank you. Are these charges in the range 1100+ GST? And additional for issuing BRC.

Much higher for me since the invoice amount is high.

[carguy2021]

Originally Posted by Samurai

Much higher for me since the invoice amount is high.

Makes sense as they might be including charges/commission based on the invoice value.

Thank you again for your quick response.

Now will have to wait for the BRCs to be issued.

I also now have to file condonnation for few invoices they were processed before STPI registration was approved. Hopefully that goes smooth.

[Samurai]

Originally Posted by mitsu_san_4488

What's the best way forward? Does one register and comply moving forward or go about getting the last 2 years worth of purpose codes changed? i have seen elsewhere that there is a condonation process, and penalties involved i'm not sure if RBI is imposing harsh penalties yet.

Yes, register as non-STPI unit and then email or visit STPI and ask for the process to fix the old remittances. They will advise based on your case.

[mitsu_san_4488]

Originally Posted by carguy2021

Makes sense as they might be including charges/commission based on the invoice value.

Thank you again for your quick response.

Now will have to wait for the BRCs to be issued.

I also now have to file condonnation for few invoices they were processed before STPI registration was approved. Hopefully that goes smooth.

How long did it take for you to get your registration approved? and what documents did they ask for?

[Samurai]

Originally Posted by mitsu_san_4488

How long did it take for you to get your registration approved? and what documents did they ask for?

All details are here: https://stpionline.stpi.in/unit/unit...gistration.pdf

It takes about 2 months on average.

I had to recently re-register, since my office moved from Bangalore to Manipal. I had to create a fresh registration in Manipal STPI. One clear advantage, the smaller STPI branches are way faster to respond to applications/queries than Bangalore branch, which has way too many companies to deal with.

[mitsu_san_4488]

Originally Posted by Samurai

All details are here: https://stpionline.stpi.in/unit/unit...gistration.pdf

It takes about 2 months on average.

I had to recently re-register, since my office moved from Bangalore to Manipal. I had to create a fresh registration in Manipal STPI. One clear advantage, the smaller STPI branches are way faster to respond to applications/queries than Bangalore branch, which has way too many companies to deal with.

Thanks again for the information, that's helpful to know about the wait times varying between different locations. I've been looking around for CA's that have this expertise in Bangalore. As you know, there are very few with this knowledge. The one i talked to is charging 1.5 lacs a year for just the stpi compliances (including registration, filing, annual and quarterly performance reports and attestation from the CA). Since i do not have an idea about the charges for these services, is this a reasonable price? I have only one invoice per month and am a sole proprietor.

[Samurai]

Originally Posted by mitsu_san_4488

Since i do not have an idea about the charges for these services, is this a reasonable price? I have only one invoice per month and am a sole proprietor.

No, it is too much. Do it yourself if it is one invoice per month, won't more than take 3-4 hours per month. Ask any doubts here, will clarify.