A Detailed Guide to GST Export Refunds in India
Vikash Kumar Surana
Vikash Kumar Surana is a Qualified Company Secretary, Associate Member of CISI UK, and Founder of THE FINOPS Services (est. 2017). With 15+ years of expertise in indirect taxation (GST, Excise, VAT, DGFT, MSME subsidies like PLI, RODTEP), he specializes in tax strategy, litigation, and compliance across industries like manufacturing, ports, steel, and healthcare.
The Goods and Services Tax (GST) framework in India facilitates seamless trade, particularly for exporters. A key feature of this framework is the GST export refund, which enables businesses engaged in international trade to reclaim the GST paid on inputs and input services. This guide will delve into the intricacies of the GST export refund process, eligibility criteria, types of refunds, required documentation, and the overall procedure.
Understanding GST Export Refund
The GST export refund is a mechanism that enables exporters to recover the Goods and Services Tax (GST) they have paid on inputs and input services used in the production of goods or services that are exported. This refund can be credited directly to the exporter’s registered bank account or adjusted against domestic output tax liabilities. Essentially, it ensures that exporters are not burdened with tax costs, thereby enhancing their competitiveness in the global market.
What Is a GST Refund on Exports, and How Does It Work?
Zero-rated supplies, such as exports, deemed exports, and supplies to SEZ units or developers, are exempt from tax, meaning the government does not levy any GST on such transactions.
However, any taxes paid in the process are refundable under the GST export refund mechanism if the prescribed procedure is followed correctly.
Who is Eligible for the GST Export Refund?
Eligibility for claiming a GST export refund arises under several circumstances:
- Export of Goods or Services: Businesses engaged in international trade can apply for refunds.
- Supplies to Special Economic Zones (SEZs): Supplies made to SEZ units and developers qualify.
- Deemed Exports: Certain supplies classified as deemed exports are eligible.
In India, exports under GST can be carried out in two ways:
- Through the payment of IGST
Exports are treated as an interstate movement of goods & hence attract IGST. If you pay IGST on exports, you can claim the refund on this integrated GST paid by filing a shipping bill (Deemed Refund Application) & other supporting documents. The person in charge of such exports must file an Export Report or Export Manifest & mention the shipping bill number & dates to file a refund claim.
- Through Bond or Letter of Undertaking (LUT)
1) If the export of goods takes place without the payment of the integrated GST & using a bond or LUT, through Form GST RFD-11, then the exporter can claim a refund of the unutilised and eligible ITC.
2) Any taxes paid as an input to the exports can be claimed by the exporter.
3) An Export Report or Export Manifest must be filed under the Customs Act before submitting a refund application on the common portal.
4) An exporter can carry out exports, with or without paying the GST. In either case, they will be able to claim a refund of the IGST paid or the unutilized Input Tax Credit (if IGST is not paid).
Refunds under GST Exports: Basic details
Before discussing the process of claiming a GST refund on exports, it is important to address some common questions.
What is Form GST RFD-01/1A?
Form GST RFD-01/1A is the form used for claiming the GST refund for export. A taxpayer can only claim a GST refund if the value is more than Rs. 1000, using GST RFD-01/1A.
The primary difference between Form GST RFD-01 and GST RFD-1A is that the former is filed online, while the latter must be filed manually by the taxpayer. This form can be used for claiming a GST refund for the following cases:
- Exports with payment of IGST
- Exports—without payment of IGST
- Excess payment of Taxes
- Deemed Exports
- Supplies to SEZ Unit or Developers
- For extra balance available in the Electronic Cash Ledger
- Cumulative ITC due to double or extra payment of input tax, such that the input tax is higher than the outward tax liability.
Upon filing Form GST RFD-01/1A to claim a GST refund in any of the mentioned cases, the tax authorities issue an acknowledgment (GST RFD-02) to notify the taxpayer of the refund processing status.
For which type of refund is Form GST RFD-01/1A not applicable?
There are several cases in which Form GST RFD-01/1A is not required or applicable for claiming GST refunds, including:
- Exports where IGST is paid & the shipping bill is deemed as a refund application.
- Exports with payment of Export Duty
- UN, Embassies & any other person so notified
- Casual or Non-residential Taxpayers
- Exports where the duty drawback scheme is availed on the GST paid.
Who Can Claim GST Refund from Exports?
A taxpayer can claim a refund under GST in the following scenarios:
- Export of Goods and Services.
- Deemed Exports
- Supplies to SEZ units & developers
- Refund of accumulated ITC due to inverted duty structure
What are the procedures to claim or apply for a GST refund?
The following are the prerequisites that may be required before claiming a GST refund:
- File form GSTR-1 for the month in which you are making the claim. Mention such supplies & their details against which you are claiming a refund in GSTR-1.
- File form GSTR-3B for the month prior to the month when you are making the claim.
- Filing Form GST RFD-01/1A
- File an Export Report or Export Manifest
A certificate by a CA or a cost accountant may be required in certain cases.
Is there a specified timeline for claiming GST refunds on exports? What is a ‘relevant date’?
The most relevant date to claim the refund under GST for exports is the point in time when a taxpayer can start claiming the applicable GST refund.
You can make the GST Refund Application up to two years from the Relevant Date.
Given below is the Relevant timetable for various types of Exports
| Refund Type | Relevant Date |
1 | Goods Exported via Sea or Air | The date on which the ship or aircraft in which such goods are loaded, leaves India |
2 | Goods Exported via Land | Date when such goods cross the frontier |
3 | Goods Exported via Post | Date when such goods cross the frontier |
4 | Complete Supply of Service before payment receipt | Date of receipt of payment in convertible foreign exchange |
5 | Advance delivery of Services, prior to the date of issuance of Invoice | Date when the invoice is issued |
6 | Refund of unutilized ITC, when IGST is not paid at the time of Export | End of the financial year |
Now that you are aware of all the rules & prerequisites of the GST Refund Process, understanding it would be simpler & more organized.
There are two types of GST refunds in exports; let us see the claiming process in detail for each one separately.
The Refund process in case of Export With Payment of IGST
There is an option of exporting goods with the payment of IGST, the refund for which can later be claimed by the taxpayer.
On filing a refund application for the IGST Refund, a temporary grant of Provisional GST Refund is ordered until the tax authorities check & decide to either sanction or reject the refund.
In cases where the exports are carried out with the payment of IGST, then you can claim a complete refund of the IGST amount by following the given process-
A. Reporting in ICEGATE—The first step in order to claim the refund of the IGST paid would be to file the Shipping Bill & other supporting documents on the ICEGATE Portal, which CHA files a Shipping in ICEGATE via the e-Sanchit portal.
The shipping bill is the primary document that must be filed to claim a refund of IGST.
B. GSTR-1 Filing—Step 2 would be to accurately report such supplies in the GSTR-1 (Outward Supply Returns). You must declare the details of exports in Table 6A, supplies to SEZ in Table 6B, and deemed exports in Table 6C of Form GSTR-1.
Following are the details you need to furnish in these tables:
- Invoice date
- Port code
- Shipping Bill number
- Shipping Bill date
- Total Invoice & Taxable value
- Select ‘With Payment of Tax’ or ‘Without Payment of Tax,’ as applicable.
- It is essential to enter these details accurately in Form GSTR-1, ensuring that they match those in the Shipping Bill.
- The ICEGATE portals match & verify the details of the two forms, & a mismatch may cause you to lose the refunds.
C. GSTR-3B Filing— The final step would be to declare the details of exports in Form GSTR-3B. You must fill in the relevant details in Table 3.1(b)—Outward Taxable Supplies of GSTR-3B.
- The ICEGATE will then match the shipping bill details with the details that you entered in the form GSTR-1 & GSTR-3B and then process the refund towards the bank account mentioned by you in the GST Portal.
- The GST refund is typically disbursed to the registered bank account within 60 days, as per the procedure. If GST refunds are not disbursed within 60 days, an interest of 6% from the date of export must be paid to the exporter.
- The taxpayer can view refund details in the export ledger.
- You can check the refund status by logging into the GST Portal & using, Services > Refunds > Track status of invoice data to be shared with ICEGATE.
Note: This process is not applicable to the export of services with payment of IGST. For such services, you will have to file the refund Form GST RFD-01/01A.
The refund process in case of export without payment of IGST & using a bond or LUT.
There is an option for taxpayers to export goods or services without the payment of IGST. A special type of document is required, though, instead of paying the IGST. A Bond or a Letter of Undertaking in GST can be used to export goods without having to pay the IGST.
In cases where exports take place based on LUT or Bond, taxpayers will be allowed to claim the refund of unutilized ITC so paid in the making of such goods. While claiming ITC on the export of goods the GST Return Filling process remains the same; you will need to file Form GSTR-1 & GSTR-3B as usual, except while claiming a refund of ITC, you need to select ‘Without payment of tax’ in the Exports Table.
You only need to file the following forms on the GST Portal to claim the refund of unutilized ITC:
A. Refund Amount Calculation on Exports through Bond/LUT –As per section 54(3) of the CGST Act,
Refund Amount = (Turnover of zero-rated supply of goods + Turnover of zero-rated supply of services) x Net ITC Adjusted total turnover
B. Filing of LUT—You must declare the LUT separately in Form GST RFD-11 in the GST Portal, Services > User Services > Furnish LUT.
Furnish all the other details that are required in the form, digitally sign the form, and proceed to submit. This is a mandatory step towards claiming the refund of ITC, and if you miss this step, your claiming process will be considered incomplete and hence invalid.
C. Declaring the Bond—While exporting through bonds, you need to declare the bond manually signed on a stamp paper, offline, and submit it to the Jurisdictional Deputy/Assistant Commissioner, along with other supporting documents.
D. Filing Form GST RFD-01/01A—Even while claiming the refund of ITC on export of goods, you need to claim the refund by filing Form GST RFD-01 (online) or GST RFD-01A (manual).
To successfully file this form and to keep it precise, you must furnish all the required details, details of unutilized ITC on the zero-rated supplies, confirmation if GST RFD-11 is filed, and add the digital signature before submitting it.
Ensure that the supporting documents for supplies are attached to both the bond and the LUT when claiming a refund under GST. Similar to IGST refunds, an Application Reference Number (ARN) will be issued to track the refund status on the portal.
You can track the status of your application on the GST Portal, Services > Refunds > Track Application Status.
If the application is properly validated & approved by the tax authorities, you will receive the ITC in your Electronic Credit Ledger within 60 days from the date of acknowledgment.
Conclusion
Understanding the intricacies of the GST export refund process is crucial for businesses engaged in international trade. By adhering to eligibility criteria, maintaining proper documentation, and following established procedures, exporters can efficiently navigate this system and reclaim taxes paid on their inputs. This not only enhances cash flow but also strengthens their competitive position in global markets. For any queries or assistance regarding specific cases, it is advisable to consult with tax professionals or relevant authorities.
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