How do exporters claim GST refund on zero-rated supplies

Question

I export goods and I have unutilised input tax credit built up, and I want to know how to get a GST refund as an exporter. I would like to understand which provision governs this, what it entitles me to, and how long I have before the remedy lapses. I also want to know whether I need a lawyer for this or can do it myself.

MyVakeel Legal Desk · Accepted Answer

In India, the answer to "How do exporters claim GST refund on zero-rated supplies" turns on Integrated Goods and Services Tax Act, 2017, Section 16, Central Goods and Services Tax Act, 2017, Section 54 and Central Goods and Services Tax Rules, 2017, Rule 89. The points below set out the position and then what to do about it, in the order it should be done.

Section 16 of the Integrated Goods and Services Tax Act, 2017 treats exports of goods and services as zero-rated supplies, giving an exporter two routes for claiming a GST refund: exporting under a Letter of Undertaking without paying IGST and claiming refund of unutilised input tax credit, or exporting on payment of IGST and claiming refund of that IGST paid.

Section 54 of the Central Goods and Services Tax Act, 2017 sets out the general refund mechanism and requires refund applications to be filed within two years from the relevant date, which for exports is generally the date of export or the date of receipt of payment in convertible foreign exchange, whichever is applicable.

Where goods are exported on payment of IGST, the refund of IGST is largely processed automatically based on shipping bill data transmitted by customs, matched against the GST return, without requiring a separate manual refund application in most cases.

Where the LUT route without payment of IGST is used, the refund of accumulated input tax credit must be claimed manually through Form GST RFD-01 with a formula prescribed under Rule 89 of the Central Goods and Services Tax Rules, 2017, capping the refund at the proportion of turnover of zero-rated supplies to total turnover.

Refund claims can be withheld or rejected if the exporter has not complied with the applicable export documentation such as shipping bills, bank realisation certificates, or export general manifest, so exporters must reconcile GST returns with customs and bank records before applying.

In practice, in this order: 1) Decide whether to export under LUT without IGST or on payment of IGST; 2) Reconcile shipping bills, GST returns and bank realisation certificates; 3) File Form GST RFD-01 with supporting documents for the LUT route; 4) Track refund status on the GST portal and respond to any deficiency memo promptly.

Timing matters here: Integrated Goods and Services Tax Act, 2017, Section 16 works on limitation periods, so a gst refund exporters claim that is right on the merits can still fail if it is brought late. You can post the details on the MyVakeel forum for a practising advocate to review, or book a paid consultation with a Bar Council verified lawyer in tax law.