GST Refunds for Indian Exporters & Zero Rated Supplies

This guide explains how GST refunds work for Indian exporters and suppliers of zero-rated supplies. You’ll learn the eligibility conditions, the step-by-step process to claim a refund, common mistakes to avoid, and troubleshooting tips. The process is largely online through the GST portal, and you’ll need your GSTIN, login credentials, and relevant export documents.

What You’ll Need

• GSTIN (GST Identification Number) and login credentials for the GST portal
• Valid export orders, shipping bills, and bill of lading or airway bill
• Invoices and payment proofs (for supplies or export of services)
• Bank account details (for refund credit) and IFSC code
• Copy of the relevant shipping bill or export invoice
• Details of IGST paid on export (if any) or LUT (Letter of Undertaking) number

Step-by-Step

1. Determine your refund type. There are two main scenarios: (a) Export with payment of IGST – you pay IGST on the export and claim a refund of that IGST; (b) Export without payment of IGST – you export under a Letter of Undertaking (LUT) or bond and claim a refund of accumulated ITC (Input Tax Credit) on inputs/input services used in the export.
2. File your export returns. Ensure your GSTR-1 and GSTR-3B are filed for the relevant tax period. For exports, report the export invoices in GSTR-1 with the correct shipping bill details. The shipping bill must be linked to the invoice in the system.
3. For exports with IGST payment: After filing GSTR-1 and GSTR-3B, the shipping bill data is auto-transmitted to GSTN. The refund is processed automatically if the details match. You may not need to file a separate application for the IGST refund, but you must ensure the shipping bill is valid and the payment is reflected in GSTR-3B.
4. For exports under LUT (without IGST payment): You need to file a refund application in Form GST RFD-01 on the GST portal. Navigate to Services > Refunds > Application for Refund. Select the refund type “Export of Services” or “Export of Goods” (as applicable) and choose the reason “Refund of accumulated ITC on account of export without payment of tax”.
5. Fill in the refund details. Enter the tax period, the amount of refund claimed (based on the formula), and upload the required documents: a statement of export invoices (Annexure A for goods, Annexure B for services), a declaration that the export has been completed (with shipping bill details), and a self-certified copy of the LUT (if not already on file).
6. Submit the application. After filling the form, file it digitally using a Digital Signature Certificate (DSC) or Aadhaar-based OTP. Note the Application Reference Number (ARN) for tracking.
7. Track and respond to queries. The officer may issue a deficiency memo or seek clarification. Respond within the given time (usually 15 days) by submitting the required documents or rectifying the application.
8. Receive the refund. Once approved, the refund is credited to your bank account (pre-validated in the system). The processing time is typically 30-60 days from the date of application, but may vary.

Common Mistakes

• Mismatch between shipping bill details and invoice details (e.g., invoice number, date, value).
• Filing the refund application before the export is actually completed (i.e., before the shipping bill is issued).
• Claiming refund of ITC on inputs that are not directly used in the export (e.g., capital goods or goods used for exempt supplies).
• Not maintaining proper records of export documents, such as FIRC (Foreign Inward Remittance Certificate) for services.
• Using an expired LUT or not renewing it before the refund period.

Tips

• Always reconcile your GSTR-1 and GSTR-3B with the shipping bill data before filing the refund.
• For services, ensure you receive the foreign exchange within the prescribed time (usually 1 year) and keep the FIRC.
• Use the “Track Application Status” feature on the GST portal to monitor progress.
• If you are a regular exporter, consider filing a LUT at the beginning of the financial year to avoid paying IGST on exports.
• Keep a checklist of documents to avoid deficiency memos.

Troubleshooting

If your refund is rejected or delayed, check the following:

• Deficiency memo: If you receive a deficiency memo, it will list the missing documents or mismatches. Correct and resubmit within the specified time.
• Mismatch in shipping bill: If the shipping bill is not visible in the system, contact the customs authorities to ensure the shipping bill is properly filed and linked to your GSTIN.
• Invalid LUT: Ensure your LUT is valid for the period. If it has expired, file a new LUT before claiming the refund.
• Refund amount incorrect: Recalculate the refundable amount using the formula (export turnover / total turnover) * ITC. If you used a wrong formula, file a revised application.
• Bank account not validated: Ensure your bank account is pre-validated in the GST system by adding it in the registration details.

Frequently Asked Questions

What is a zero-rated supply?

A zero-rated supply is an export of goods or services, or a supply to a SEZ unit/developer, on which no GST is charged. The supplier can claim a refund of the input tax credit used in making that supply.

What is the difference between refund of IGST and refund of ITC?

Refund of IGST is when you export with payment of IGST and claim a refund of that tax. Refund of ITC is when you export under LUT (without paying IGST) and claim a refund of the input tax credit accumulated on inputs/input services used in the export.

Do I need to file a separate refund application for IGST paid on exports?

No, for exports with IGST payment, the refund is processed automatically after filing GSTR-1 and GSTR-3B, provided the shipping bill details match. However, you may need to file a refund application if there is a discrepancy or if the system does not auto-process it.

What is the time limit to file a refund application?

The refund application must be filed within two years from the end of the quarter in which the export took place (or the relevant date). For example, for exports in Q1 (April-June), the deadline is June 30 of the following year.

Can I claim refund of GST paid on inputs used for exports if I have a LUT?

Yes, that is exactly the purpose of the LUT. You can claim a refund of the accumulated ITC on inputs/input services used in the export, without paying IGST on the export.

What documents are needed for refund of ITC on export of services?

You need the export invoices, a statement of export invoices (Annexure B), a declaration that the export has been completed, and proof of receipt of foreign exchange (FIRC or bank statement) within the prescribed time.

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