GST Refund for Exporters in India: Eligibility, Forms, Timelines

Exporters operate on thin margins and tight cash cycles. A stuck GST refund can mean blocked working capital, delayed vendor payments, and missed purchase discounts. This guide explains how to get GST refunds right the first time: eligibility, LUT vs rebate, forms, timelines, documentation, and common mistakes to avoid. It is written for Indian exporters, D2C brands shipping overseas, merchant exporters, and service exporters.

Who can claim a GST refund on exports

Under India’s GST regime, exports of goods and services are treated as zero-rated supplies. That means exporters can claim a refund of input tax credit (ITC) or of the IGST paid on exports. The two primary routes are:

• Export under LUT/Bond without payment of tax – Claim refund of unutilised ITC.
• Export on payment of IGST – Claim refund of the IGST paid on the shipping bill.

Both routes are valid. Your choice should be based on cash-flow realities, product margins, ITC build-up, and refund processing comfort.

LUT vs Rebate: which route should you use

Route A: LUT/Bond without payment of tax

Exporters furnish a Letter of Undertaking (LUT) for the financial year, export without paying IGST, and claim a refund of accumulated ITC. This is generally preferred for consistent exporters with steady input taxes and thin cashflows.

Pros

• No cash outflow on IGST at export
• Better cash-flow planning for frequent shipments
• Useful when there is regular ITC accumulation

Cons

• Refund depends on accurate ITC mapping and inverted duty positions
• More documentation checks on input side

Route B: Export on payment of IGST (rebate)

Exporters pay IGST on the invoice/shipping bill and later receive a refund of the IGST paid. For some, this is simpler, as the shipping bill often doubles as a refund application when data reconciles smoothly.

Pros

• Comparatively fewer ITC matching issues
• Shipping bill data can fast-track refund (subject to matching)

Cons

• Upfront IGST cash outflow, affecting working capital
• Risk of delay if shipping bill data or EGM does not match

Key forms and portals

• LUT filing: Furnish LUT on the GST portal at the start of each financial year.
• GSTR-1 and GSTR-3B: Ensure export supplies are correctly reported in Table 6A/6B and corresponding 3B tables.
• Refund application: File RFD-01 for refund of unutilised ITC (under LUT route). Track with RFD-01 ARN.
• Shipping Bill: For IGST-paid exports, the shipping bill + EGM act as the refund trigger when matched with GSTR data.
• ICEGATE/Customs: For IGST paid exports, reconciliation with ICEGATE is crucial.

Eligibility and documentation checklist

Use this checklist before every claim to reduce objections and keep refunds moving.

Export under LUT (refund of ITC)

• Active LUT for the financial year
• Copy of export invoices and corresponding shipping bills
• Export General Manifest (EGM) filed by carrier
• FIRCs/BRCs for export of services
• GSTR-1 with Table 6A/6B correctly filled
• GSTR-3B showing outward zero-rated supplies and ITC claimed
• Statement of used inputs/input services for exported supplies
• Reconciliation: invoice, shipping bill, EGM, GSTR-1/3B, ICEGATE (as applicable)
• Declaration and undertakings as per RFD-01

Export on payment of IGST (refund of IGST)

• Tax invoice and shipping bill with IGST paid
• Correct GSTR-1 reporting (Table 6A/6B)
• GSTR-3B with tax payment correctly reflected
• EGM filed and matched
• ICEGATE linkage and bank account validation

Timelines: how long do refunds take

Refund processing timelines can vary by route and accuracy of data. As a broad guide:

• LUT route (ITC refund): Typically several weeks after a clean RFD-01, depending on jurisdiction, volume, and completeness.
• IGST-paid route: Often faster if shipping bill data, EGM, and GSTR-1/3B match seamlessly, but mismatches can cause delays.

To maintain cash flow, plan submissions monthly or quarterly, rather than letting credits accumulate for too long.

Common mismatch issues and how to prevent them

• Invoice-shipping bill mismatch: Keep invoice numbers consistent and avoid typographical differences between accounting software and customs filings.
• EGM not filed or not matching: Coordinate closely with your CHA and logistics partner to ensure the EGM is filed and visible.
• GSTR-1 vs 3B variance: Run monthly reconciliations; ensure zero-rated supplies and tax payments line up.
• Bank account validation pending: Validate the refund-receiving bank account on the portal ahead of time.
• Ineligible ITC: Exclude blocked credits (motor vehicles ineligible categories, personal consumption, etc.) from the refund computation.

Practical cash-flow strategies for exporters

• Choose the right route per shipment mix: High IGST outgo and slow refunds suggest LUT route; low ITC and clean data flows may favour IGST-paid exports.
• Monthly reconciliations: Don’t wait for quarter-end. Match shipping bills, EGM, and returns monthly.
• Dedicated refund tracker: Maintain a simple tracker with invoice no, shipping bill no, EGM date, ARN, and current status.
• Coordinate with CHA early: Get shipping bill drafts reviewed before filing to prevent keying errors.
• Maintain a refund SOP: Document internal steps and responsibilities so refunds aren’t person-dependent.

Step-by-step: refund under LUT (unutilised ITC)

1. Furnish LUT for the current financial year on the GST portal.
2. Export goods or services without charging IGST.
3. Ensure accurate reporting in GSTR-1 and 3B (zero-rated supplies and ITC).
4. Compile ITC ledger and export document pack (invoices, shipping bills, EGM, BRC/FIRC for services).
5. File RFD-01 with declarations and supporting statements.
6. Track ARN and respond promptly to any clarifications.
7. Receive refund to the validated bank account.

Step-by-step: refund of IGST paid on exports

1. Export with IGST paid on invoice/shipping bill.
2. Verify shipping bill and EGM details for accuracy.
3. Report export supplies correctly in GSTR-1 and 3B.
4. Ensure ICEGATE and GST data reconciliation.
5. Track refund status; address any data mismatches quickly.

Special notes for service exporters

• Place of supply: Confirm that the recipient is outside India and that payment is received in convertible foreign exchange or INR where permitted.
• BRC/FIRC: Keep bank realisation certificates handy; they are often requested for service export refund verifications.
• Agreements and SOWs: Ensure contracts define deliverables clearly to establish export of service conditions.

Avoid these common mistakes

• Using different invoice formats for customs and GST returns
• Not renewing LUT at the start of the financial year
• Claiming refund on blocked credits
• Waiting till year-end to file refunds, creating large reconciliation burdens
• Missing bank account validation steps on the portal

When to seek professional help

Bring in a specialist when you see repeat mismatches, large unclaimed ITC balances, or prolonged refund delays. A focused review of your export workflow from invoice creation to EGM filing typically reveals process gaps that can be fixed within a month.

Conclusion: build a refund engine, not one-off claims

Exports are zero-rated, but refunds aren’t automatic. The right route (LUT vs IGST), disciplined reconciliations, and a clear documentation trail are the difference between fast refunds and cash-flow stress. If you need a compliant, repeatable refund process, set up a quick discovery call.

Need help with GST refunds for exports? Book a consultation with SamRams Associates. We streamline reconciliations, documentation, and submissions while keeping you compliant.

FAQ

Is LUT mandatory for export without payment of IGST

Yes. An active LUT for the current financial year is required if you export without paying IGST and intend to claim a refund of unutilised ITC.

How long do GST refunds take for exporters

Clean, well-reconciled applications are often processed in a few weeks, but timelines vary by jurisdiction, workload, and data accuracy.

Can I switch between LUT and IGST-paid export routes

Yes. Both are permitted. Choose per shipment or period based on cash flow, ITC build-up, and data-matching comfort.

Why is my IGST refund delayed despite export

Delays typically stem from mismatches between shipping bill, EGM, and GSTR-1/3B data or pending bank account validation.

What documents are needed for service export refunds

Agreements/SOWs, invoices, BRC/FIRC, and proof of services consumed outside India are commonly required.