GST
How does GST work for Indian exporters?
LUT vs IGST refund, input tax credit rules, GST on freight, GSTR-1 Table 6A, and filing deadlines.
By Aaryan Kakani · · 4 min read
Are exports zero-rated or exempt under GST?
Export of goods or services from India is a zero-rated supply under Section 16 of the IGST Act, 2017. Zero-rated is not the same as exempt. You pay 0% output tax but retain full input tax credit (ITC) eligibility on purchases.
Exporters have two options to effect zero-rated supply:
| Parameter | Option A: Export under LUT/Bond | Option B: Export with IGST Payment |
|---|---|---|
| Legal basis | Section 16(3)(a) IGST Act | Section 16(3)(b) IGST Act |
| IGST on export invoice | Nil (no tax paid) | IGST charged at applicable rate (5%/12%/18%/28%) |
| ITC treatment | Claim refund of accumulated ITC (RFD-01) | ITC used to offset IGST liability; refund via shipping bill |
| Cash flow impact | No cash outflow on exports | IGST paid upfront; refund in 7-60 days |
| Refund mechanism | Manual application (RFD-01) | Automatic via ICEGATE-GST integration |
| Best for | Most exporters (default choice) | Exporters disqualified from LUT; high-ITC businesses where IGST offset is straightforward |
How do I file a Letter of Undertaking (LUT)?
LUT is a declaration filed on the GST portal undertaking to export within the specified time and to pay IGST with interest if conditions are violated.
| Detail | Specification |
|---|---|
| Form | GST RFD-11 |
| Validity | One financial year (April 1 to March 31) |
| Who can file | Any registered person with a valid GSTIN |
| Disqualification | Prosecuted for tax evasion exceeding Rs. 2.5 crore under GST Act, CGST Act, or any existing law |
| Filing path | GST Portal → Services → User Services → Furnish LUT |
| Witnesses required | Two independent witnesses (name, address, occupation) |
| Auto-approval | Yes. Effective immediately upon filing (no officer approval needed) |
What do I need to file LUT each year?
- File before April 1 each year, or before your first export of the financial year. Whichever is earlier.
- Keep two witness details handy. Name, full address, and occupation. They need not be related to the business.
- Verify LUT status after filing. Download the acknowledgement from the GST portal for your records.
- Cross-check with CHA/freight forwarder. Share LUT ARN so they can reference it on shipping bills.
How do I get my IGST refund on exports?
If you choose to pay IGST on exports (or cannot file LUT), the refund is processed automatically when Customs shipping bill data matches your GSTR-1 data. No separate refund application is needed.
How does the automatic IGST refund process work?
- You file export invoices in Table 6A of GSTR-1 with shipping bill number, shipping bill date, and port code.
- Customs system (ICEGATE) transmits shipping bill data (including FOB value, IGST paid, and LEO (Let Export Order) date) to the GST system.
- GST system matches GSTR-1 Table 6A data with ICEGATE data on: invoice number, taxable value, IGST amount, and port code.
- On successful match, refund is sanctioned and credited to the bank account registered in your GST profile.
| Timeline | Duration |
|---|---|
| Successful match → refund credit | 7-15 days |
| If mismatch → manual intervention | 30-90 days (or more) |
| Outer time limit for refund application | 2 years from relevant date (Section 54) |
Why is my IGST refund stuck or delayed?
| Issue | Fix |
|---|---|
| Invoice number mismatch between GSTR-1 and shipping bill | Amend GSTR-1 in next period; ensure exact character match |
| Taxable value difference (>Rs. 10 variance) | Match FOB value on shipping bill to GSTR-1 taxable value exactly |
| Missing LEO date | Follow up with CHA; LEO must be granted by Customs for refund to trigger |
| Wrong port code in GSTR-1 | Use the 6-digit ICEGATE port code, not the city name |
| GSTR-3B IGST amount does not match GSTR-1 | Reconcile Table 3.1(b) of GSTR-3B with Table 6A of GSTR-1 before filing |
How do I claim ITC on export inputs?
Exporters are entitled to full ITC on inputs and input services used for making zero-rated supplies, regardless of whether they export under LUT or with IGST payment.
How do LUT exporters claim ITC refund under Rule 89?
When exporting under LUT, no output tax is paid, so ITC accumulates. Claim refund of this accumulated ITC using Form GST RFD-01 .
Refund Formula. Rule 89(4)
Refund Amount = (Turnover of zero-rated supply of goods + Turnover of zero-rated supply of services) / Adjusted Total Turnover × Net ITC
Net ITC = ITC availed during the period minus ITC availed on capital goods and input services used exclusively for non-zero-rated supplies. Adjusted Total Turnover = Total turnover minus value of exempt supplies (excluding zero-rated supplies).
What documents do I need for ITC refund (RFD-01)?
| Document | Rule Reference | Notes |
|---|---|---|
| Statement of invoices for zero-rated supplies | Rule 89(2)(b) | All export invoices for the refund period |
| Declaration of no prosecution | Rule 89(2)(c) | Confirming no pending prosecution for >Rs. 2.5 crore |
| BRC / FIRC for export proceeds | Rule 89(2)(d) | Proof of receipt of export proceeds (for services); not mandatory for goods but advisable |
| Statement 3 / Statement 3A | Rule 89(4) / 89(4A) | Auto-populated on GST portal based on GSTR-1 and GSTR-3B data |
What are common ITC pitfalls exporters should avoid?
- ITC claimed but supplier has not filed GSTR-1. ITC will not reflect in GSTR-2B. Refund may be rejected for the unmatched portion. Follow up with suppliers before filing refund.
- ITC on capital goods. Not eligible for refund under Rule 89(4) formula (only revenue ITC is refundable). Capital goods ITC is adjusted against output liability over time.
- Proportional ITC reversal. If inputs are used for both taxable domestic and zero-rated supplies, ITC must be apportioned per Rule 42/43.
- Time limit. ITC refund application must be filed within 2 years from the relevant date (last day of the month in which the goods are exported).
Is GST charged on export freight?
Freight GST treatment depends on the leg of transportation and the export terms (FOB vs CIF).
| Freight Leg | GST Rate | SAC Code | ITC Eligible? |
|---|---|---|---|
| Factory/warehouse to Indian port (domestic) | 18% (5% for GTA under forward charge) | 9965 / 9966 | Yes |
| Indian port to foreign port (international) | Zero-rated (0%) | 9965 | N/A (no GST charged) |
| CIF exports. Freight included in export value | Part of zero-rated export value | . | Covered under export zero-rating |
| Foreign port to buyer (destination country) | Outside Indian GST scope | . | N/A |
How do place of supply rules affect export freight GST?
- International freight by Indian carrier (Place of supply is the destination of goods (outside India), so the service is an export of service) zero-rated per Section 13(9) IGST Act.
- Freight by foreign shipping line. If the shipping line is not registered in India, the exporter pays GST under reverse charge mechanism (RCM) at 18%. This RCM-paid GST is eligible for ITC.
- Freight forwarder invoicing. Many freight forwarders issue a single invoice covering both domestic and international legs. Ask for a split invoice to correctly claim ITC on the domestic portion and exclude the zero-rated international portion.
What do I report in GSTR-1 and GSTR-3B for exports?
Exporters must file the same GST returns as any registered business, with specific tables and fields for export transactions.
| Return | Export-Specific Section | Deadline | Key Points |
|---|---|---|---|
| GSTR-1 | Table 6A. All export invoices, whether under LUT/bond or on payment of IGST. The route is flagged inside the table as WPAY or WOPAY, not by using a different table. (Table 6B is SEZ supplies.) | 11th of following month | Include shipping bill number, date, port code. Must match Customs data exactly. |
| GSTR-3B | Table 3.1(b). Zero-rated outward supplies | 20th of following month | Report total zero-rated supply value. For IGST route, IGST amount goes here. For LUT, taxable value only. |
| GSTR-9 | Table 4 (outward supplies). Segregate zero-rated | December 31 of following FY | Annual return. Reconcile with monthly filings. Report total exports, ITC claimed, and refunds received. |
| RFD-01 | Refund of ITC on zero-rated supplies | Within 2 years from relevant date | Only for LUT exporters. Statement 3/3A auto-calculated. Attach required declarations. |
| RFD-11 | Letter of Undertaking for export | Before April 1 each year (or before first export) | Annual filing. Auto-approved. No officer intervention needed. |
Why is my export GST refund stuck?
Recurring problems that exporters face with GST compliance, and how to resolve them.
| Issue | Impact | Resolution |
|---|---|---|
| GSTR-1 / shipping bill mismatch | IGST refund blocked | Amend GSTR-1 to match shipping bill data exactly. For shipping bill errors, file amendment with Customs (Section 149). |
| IGST refund scroll errors | Partial or nil refund credited | Check ICEGATE for scroll status. File grievance on CBIC website. Common cause: GSTIN not validated in PFMS (Public Financial Management System). |
| ITC reversal on exports | Reduced refund or demand notice | Ensure Rule 42/43 apportionment is done correctly. ITC on inputs used exclusively for exempt (not zero-rated) supplies must be reversed. |
| SEZ vs physical exports confusion | Wrong table in GSTR-1; refund rejection | SEZ supplies go in Table 6B (with/without IGST). Physical exports go in Table 6A. Do not mix. SEZ supplies require endorsement from SEZ officer. |
| Deemed exports (Section 147) | ITC refund eligibility unclear | Deemed exports (supply to EOU/EHTP/STP) attract GST. Refund can be claimed by supplier or recipient per Circular 37/11/2018-GST. Specify in supply contract who claims refund. |
| Merchant exports (Section 147 + Notification 40/2017) | 0.1% GST rate disputes | Merchant exporters buy at 0.1% GST (Notification 40/2017) and export within 90 days. If 90-day window is missed, full GST becomes payable with interest. Track the 90-day deadline per invoice. |
| Bank account mismatch in GST profile | Refund credited to wrong account or failed | Ensure the bank account in your GST registration matches the account where you want refunds. Update via amendment if changed. |
When are GST deadlines for exporters?
Month-by-month GST obligations for exporters. All dates are for the following month unless noted otherwise.
| Deadline | Filing / Action | Exporter-Specific Notes |
|---|---|---|
| Before April 1 | File LUT (RFD-11) for new FY | Must be done before first export of the financial year. Set a calendar reminder for March 25. |
| 11th of each month | GSTR-1 (outward supply details) | Report all export invoices in Table 6A/6B with shipping bill number, date, and port code. Verify against actual shipping bill data before filing. |
| 13th of each month | GSTR-2B auto-generated (ITC statement) | Review GSTR-2B to verify all supplier ITC is reflected. Flag missing invoices with suppliers before GSTR-3B deadline. |
| 20th of each month | GSTR-3B (summary return + tax payment) | Zero-rated supplies in Table 3.1(b). For LUT: only taxable value. For IGST route: include IGST amount. Reconcile with GSTR-1 before filing. |
| Monthly / Quarterly | File RFD-01 for ITC refund (LUT exporters) | Can be filed monthly or quarterly. Monthly filing recommended for better cash flow. Must be filed after GSTR-1 and GSTR-3B for the period. |
| Monthly | Reconcile GSTR-1 Table 6A with shipping bills | Match invoice numbers, taxable values, IGST amounts, and port codes. Fix mismatches in next GSTR-1 amendment. |
| Monthly | Check IGST refund scroll status | Track via GST portal: Services → Refunds → Track IGST Refund. Escalate if pending >30 days after match. |
| Quarterly | ITC reconciliation (GSTR-2B vs books) | Identify ITC gaps, supplier defaults, and Rule 42/43 apportionment issues before they accumulate. |
| September 30 | Deadline to avail ITC for previous FY invoices | Per Section 16(4), ITC for FY 2025-26 invoices must be claimed in GSTR-3B by September 30, 2026. After this, ITC lapses. |
| December 31 | GSTR-9 (annual return) for previous FY | Reconcile all export data, ITC claims, and refunds received with monthly filings. Turnover-specific: GSTR-9C (self-certified reconciliation) if turnover exceeds Rs. 5 crore. |
Update history
- First published.