GST Export Refund

Under Section 16 IGST Act, zero-rated supply (export) can be made: (a) under LUT/Bond (Form RFD-11) — supply without payment of IGST, claim ITC refund on inputs under Section 54(3)(ii); or (b) pay IGST and claim refund of IGST paid on exports (auto-processed via GSTR-1 shipping bill linkage on ICEGATE). Option (a) is preferred for large exporters — avoids cash outflow. Option (b) is simpler for occasional exporters — refund is automatic but takes 2–4 weeks.

A Letter of Undertaking under Rule 96A is filed annually on the GST portal (LUT for each financial year, before the first zero-rated supply). Who can file LUT: any registered exporter who has not been prosecuted for any offence under the CGST/IGST Act or any other law where tax evaded exceeds ₹250 lakh. LUT is valid for the entire financial year. If not filed, the exporter must pay IGST on exports and claim a refund — a cash-flow disadvantage.

Rule 89(4) formula: Refund = (Turnover of zero-rated supply of goods or services × Net ITC) ÷ Adjusted Total Turnover. Adjusted Total Turnover includes all taxable supplies (including zero-rated) but excludes exempt supplies, nil-rated supplies, and reversal of ITC under Rule 42. 'Net ITC' excludes ITC on inputs used for exempt/nil-rated supplies. GSTR-9C reconciliation of this formula is a common area of dispute.

Common reasons: (a) GSTR-1 shipping bill details (invoice number, amount, port) do not match ICEGATE customs records — requires GSTR-1 amendment or GSTN-ICEGATE helpdesk intervention; (b) LUT expired or not filed for the relevant period; (c) EGM (Export General Manifest) not filed by the shipping carrier — exporter has no control but can follow up with the shipping line; (d) GSTR-3B filed after the shipping bill date for that period (mismatch in timelines). Resolution requires coordination with the GST portal, ICEGATE, and customs.

Section 54(1): GST refund must be applied within 2 years from the 'relevant date' (for exports: date of export). Missing the 2-year window = permanent forfeiture — no condonation provision. Section 56: 6% interest per annum if the refund is not processed within 60 days of a complete application. Interest accrues automatically — it need not be separately claimed.