Indirect Export where Goods altered/additions made during export process
In case of indirect export, the goods should be exported in the same condition as being purchased exception minor alteration. But where in case when overseas customers purchased goods like heavy machineries/commerial trucks etc and do addtional modification/alteration from an other local suppliers to make it as per thier requirement & use and then export.
In this case, it is 0% sales for supplier or need to apply 5% as the goods are not exporting in the same condition as sold and such locally value addition may be upto 50% of value of the sold goods.
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The Law is very clear on this ie the goods meant for export should not be altered in any manner except for the purpose of facilitating the shipment such as packing etc. Any other alterations to the product will render the same to be ineligible for Zero rating under Art 30 of ER. So the supplier needs to charge 5% VAT.
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