Hypothetically, let’s assume a business earns Rs 10 crore annually, and all revenue is a complete Export of services with LUT
In such a case, can that business apply under Rule 14A while registering for GST, or should they select it as No?
This is for my personal understanding related to advantages and disadvantages.
Hello @thethinker,
Rule 14A does not explicitly prescribe a turnover limit and only mentions that the monthly output tax liability should not exceed ₹2.5 lakh. This provision was mainly introduced to simplify GST registration for small, low-risk businesses.
In your scenario where the turnover is as high as ₹10 crore; even if the entire revenue is from exports under LUT and the output tax liability is technically within limits, opting for Rule 14A may not really align with the intent of the rule.
From a practical and risk-management standpoint, it would be better to select “No” while applying for GST registration in such cases, despite there being no explicit turnover restriction mentioned in the law.
Hope this helps!!
GST Rule 14A explains how exporters of services can claim a refund of GSTpaid on exports. Since export of services is treated as a zero-rated supply, the government allows exporters to recover the tax so that exports remain tax-free in practice.
In simple terms, if you export services and pay GST, Rule 14A helps you get that GST back through a refund.
This rule applies if you:
· Export services outside India
· Receive payment in foreign currency
· Pay GST on the exported service
· Want a refund of the tax paid
It is commonly used by:
· IT and software companies
· Consultants and freelancers serving overseas clients
· Digital service providers
Under Rule 14A, the exporter:
1. Pays GST on exported services
2. Files the refund application
3. Receives the GST refund after verification
The goal is simple: no GST burden on exports.
· Total export of services: ₹10 crore
· GST paid on exports: ₹1.8 crore (18%)
· All services supplied to foreign clients
· Payment received in convertible foreign currency
· The ₹10 crore export qualifies as a zero-rated supply
· GST paid is eligible for a refund
· Exporter applies for a refund under Rule 14A
· After approval, ₹1.8 crore is refunded
Result: The exporter effectively pays zero GST on exports, improving cash flow.
Refunds prevent tax money from getting stuck.
No hidden GST cost in international pricing.
Clear process for exporters who pay GST and claim refunds.
· Delay in filing the refund application
· Mismatch between invoices and returns
· Not receiving payment in foreign currency
· Incorrect documentation
Avoiding these helps in faster refund processing.
Because exports should not carry domestic tax. Rule 14Aensures tax neutrality, which is crucial when your turnover is as high as ₹10 crore or more.