How to Claim GST Refund for Exports

TL;DR

Exports of goods and services are zero-rated under GST.

Exports of goods and services are zero-rated under Section 16 of the IGST Act — meaning the supply has IGST rate of zero. The exporter has two routes. Option A: Export under a Letter of Undertaking (LUT) or bond without paying IGST. You then claim a refund of the unutilised ITC (the ITC that piled up in your electronic credit ledger because your output is zero-rated). Option B: Export on payment of IGST. You then claim a refund of the IGST paid on the export. Option A is generally preferred because the cash flow impact is lower.

The Two Routes Side by Side

Aspect	Option A — LUT bond	Option B — IGST payment
Customs procedure	Export under LUT; no IGST paid at customs	Export with IGST paid at customs
Working capital	Cash-out only on inputs (already paid)	Cash-out for IGST (typically 18% of invoice value)
Refund claim	Refund of unutilised ITC	Refund of IGST paid
Refund amount	ITC accumulated on inputs, services, capital goods	IGST paid, less any cesses
Refund speed	Slower — reconciliation with GSTR-2B and shipping bill	Faster — refund is the IGST paid, matched against shipping bill
Documentation	RFD-01 + Statement of invoices + GSTR-2B reconciliation	RFD-01 + Statement of invoices + Shipping bill
Typical timeline	3–6 months	2–4 months

The LUT Route (Most Common for Regular Exporters)

Step 1 — File the LUT

The LUT is filed on the GST portal under Services → User Services → Furnish LUT. The LUT is a declaration that you will pay the GST (plus interest) on any export that the department later determines was not a genuine export. The LUT is valid for one year from the date of submission; renew annually.

For a company, the LUT is signed by the authorised signatory (DSC or e-Sign). For a proprietorship, the proprietor signs. There is no fee for the LUT.

Step 2 — Export without paying IGST

At the port / ICD / CFS, present the shipping bill marked “Export under LUT”. Customs will not collect IGST. The shipping bill is filed in the ICEGATE system; the GST portal pulls the shipping bill data through the GSTN-ICEGATE integration.

Step 3 — File GSTR-1 and GSTR-3B declaring the export as zero-rated

In GSTR-1, declare the export invoice under Table 6A — Exports with the Shipping Bill Number and Shipping Bill Date. The IGST on the export is zero. The LUT declaration is recorded in Table 6A.

In GSTR-3B, declare the zero-rated supply under Table 3.1(b). The output tax is zero. The ITC accumulated (because there is no output tax to offset) remains in the electronic credit ledger.

Step 4 — File the refund claim in RFD-01

The refund application is filed in Form GST RFD-01 on the GST portal. The application includes:

• Statement 1: Invoices for which refund is claimed.
• Statement 1A: Refund claimed on account of ITC on inputs.
• Statement 2: Invoices where refund is on account of IGST paid (only if Option B is used).

Upload the supporting documents:

• Shipping bills (the customs-issued document, not just the number).
• Bank Realisation Certificate (BRC) or Foreign Inward Remittance Certificate (FIRC) — the proof that the export proceeds have been received.
• LUT copy.
• Statement of ITC claimed in GSTR-3B.

Step 5 — The matching process

The refund officer matches:

• The shipping bill data (from ICEGATE) to the GSTR-1 declaration (Table 6A).
• The GSTR-2B to the ITC claimed (to confirm the supplier has filed GSTR-1).
• The BRC / FIRC to the shipping bill (to confirm the export proceeds have come in).

If everything matches, the refund is processed. The electronic credit ledger is debited, and the amount is sanctioned.

Step 6 — Disbursement

The refund is disbursed through the Public Financial Management System (PFMS) to the bank account declared in the refund application. The typical disbursement timeline is 30–60 days from the order.

The IGST Payment Route

For exporters who do not have an LUT, or for whom the cash flow impact of Option A is too high, the IGST payment route is the fallback. The exporter pays IGST at the time of export (customs collects it from the shipping bill). The GSTR-1 and GSTR-3B reflect the IGST paid. The refund claim is filed in RFD-01 with the IGST refund amount.

The matching is simpler because the refund amount equals the IGST paid. The shipping bill and the GSTR-1 are matched, and the BRC / FIRC confirms the proceeds.

The downside: the IGST paid is cash-out, and the refund comes back only after the matching is complete. For a working-capital-constrained exporter, this is a significant cost.

Common Errors in Refund Claims

Error 1 — Shipping bill not reflected in GSTR-1 Table 6A

The shipping bill was filed at customs, but the GST portal did not receive the data. Re-verify the shipping bill number and date, and amend the GSTR-1 declaration. The mismatch will block the refund.

Error 2 — BRC not uploaded

For an export under Option A, the BRC is the proof of inward remittance. Without the BRC, the refund officer treats the export as not complete. The BRC is issued by the bank through which the remittance is received.

Error 3 — Supplier has not filed GSTR-1

The ITC claimed on inputs cannot be refunded because the supplier’s GSTR-1 has not been filed. The GSTR-2B is empty. The refund is denied.

Error 4 — Excess refund claimed

The refund amount exceeds the ITC accumulated in the credit ledger. The excess is detected by the matching and the refund is reduced.

Error 5 — Wrong refund head

The exporter claims the refund under “refund of unutilised ITC” but the supply is actually a domestic supply (not an export). The refund is denied and the demand may be raised under Section 73 / 74.

The Inverted Duty Refund

A separate scenario: a domestic supplier whose input GST rate exceeds the output GST rate can claim a refund of the excess under Section 54(3) — the “inverted duty refund”. For example, a manufacturer with 18% inputs and 5% output can claim a refund of the unutilised ITC on the rate differential.

The refund is more complex because the formula for the refund is in Rule 89(5) of the CGST Rules and requires a monthly calculation. The maximum refund is the lesser of:

• ITC accumulated on inputs at the inverted rate, or
• Output tax paid × (ITC on inputs at inverted rate / Total ITC).

Refund for Deemed Exports

Deemed exports are supplies to specific categories notified under Section 147 — supply to an Export Oriented Unit (EOU), supply to a Special Economic Zone (SEZ), supply against an Advance Authorisation, etc. Deemed exports are treated as zero-rated, but the refund is claimed by the supplier (not the recipient).

The procedure is the same as Option A or Option B above, with the recipient’s endorsement on the deemed-export declaration.

When to Get Professional Help

Refund claims have a high rejection rate for first-time filers — the matching is unforgiving. Common issues:

• Shipping bill number mismatch.
• BRC not linked to the right shipping bill.
• Supplier GSTR-1 not filed.
• GSTR-3B Table 6.3 (TDS / TCS) mis-tallied.
• Wrong refund head.

We routinely handle refund claims for exporters — both Option A (LUT) and Option B (IGST payment), and inverted duty refunds for domestic manufacturers. Our GST return filing service covers the monthly GSTR-1 / GSTR-3B and the annual reconciliation. Share your last two shipping bills and your GSTR-2B on WhatsApp for a no-charge refund-readiness review.

For the underlying ITC eligibility rules, see our ITC guide. For the related ITC-04 (job-work) implications, see our reverse charge guide.

Sources

• GST Portal — Refunds
• CBIC — IGST Act Section 16; CGST Act Section 54; CGST Rules Rule 89, 96
• ICEGATE — Shipping Bills