Deemed Export Refunds: Who Claims, and the Undertakings

Deemed Export Refunds explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.

Deemed exports sit awkwardly between a domestic supply and a zero-rated one. Tax is charged and paid, the goods do not leave India, and yet a refund follows.

Section 147: the Government may, on the Council's recommendation, notify certain supplies of goods as deemed exports, where goods supplied do not leave India, and payment for them is received either in Indian rupees or in convertible foreign exchange, if the goods are manufactured in India. Notification No. 48/2017-Central Tax dated 18.10.2017 carries the four categories. The refund may be claimed by either the supplier or the recipient — never both — and the mechanism that prevents a double claim is a set of undertakings.

The four notified categories

(1) Supply of goods by a registered person against Advance Authorisation.

(2) Supply of capital goods by a registered person against Export Promotion Capital Goods Authorisation.

(3) Supply of goods by a registered person to an Export Oriented Undertaking.

(4) Supply of gold by a bank or Public Sector Undertaking specified in the notification under the Customs Act, against Advance Authorisation.

Note what is not in the list: supplies to an SEZ are zero-rated under s.16(1)(b) of the IGST Act, not deemed exports; and supplies to a project authority under a mega power project or similar, which were deemed exports under the Foreign Trade Policy, are not deemed exports for GST unless notified under s.147.

What a deemed export is not

Not zero-rated. Section 16 of the IGST Act covers exports and SEZ supplies only. A deemed export is a taxable supply on which tax must be charged and paid in the ordinary way.

Not eligible for an LUT. There is nothing to supply without payment of tax. Rule 96A: the LUT →

Not entitled to the export endorsement. The Rule 46 endorsement is for exports and SEZ supplies. A deemed export invoice is an ordinary tax invoice. Export and SEZ invoice endorsements →

Not outside the e-way bill or ordinary place-of-supply rules. The goods move domestically and are treated accordingly.

Who claims

Third proviso to Rule 89(1): in respect of supplies regarded as deemed exports, the application may be filed by —

(a) the recipient of deemed export supplies; or (b) the supplier of deemed export supplies, in cases where the recipient does not avail of input tax credit on such supplies and furnishes an undertaking to the effect that the supplier may claim the refund.

So the default is the recipient, and the supplier claims only where the recipient stands aside.

The two evidence requirements

Rule 89(2)(f) — a declaration to the effect that the tax has not been collected from the recipient, in the case of a refund claimed by the supplier... read with the notified evidence.

Notification No. 49/2017-Central Tax prescribes the evidence to be produced by the supplier of deemed export supplies:

(i) Acknowledgment by the jurisdictional Tax officer of the Advance Authorisation holder or EPCG Authorisation holder, as the case may be, that the said deemed export supplies have been received by them; or a copy of the tax invoice under which such supplies have been made by the supplier, duly signed by the recipient EOU, that the said deemed export supplies have been received by it.

(ii) An undertaking by the recipient of deemed export supplies that no input tax credit on such supplies has been availed of by him.

(iii) An undertaking by the recipient of deemed export supplies that he shall not claim the refund in respect of such supplies and the supplier may claim the refund.

Items (ii) and (iii) are the double-claim prevention. The supplier's refund depends on the recipient signing both.

Where the recipient claims instead, the mirror position applies — it has taken the credit and claims refund of it, and the supplier does not.

The practical difficulty

The supplier's refund is entirely dependent on the recipient's cooperation. An Advance Authorisation holder or EOU that will not sign the undertakings — because it prefers to take the credit itself, or simply does not respond — leaves the supplier with tax paid and no refund.

The commercial answer is to settle the position in the contract:

• state expressly whether the supplier or the recipient will claim;
• where the supplier claims, make the undertakings a contractual obligation with a deadline;
• where the recipient claims, price the supply accordingly, since the supplier bears no refund risk;
• obtain the jurisdictional officer's acknowledgment or the signed invoice copy as part of the delivery documentation, not afterwards.

Relevant date and unjust enrichment

Relevant date — Explanation (b) to s.54: the date on which the return relating to such deemed exports is furnished. So the two years run from the return, not from the supply. The relevant date →

Unjust enrichment — a deemed export refund is not among the six categories in s.54(8). So where the supplier claims and the amount exceeds ₹2 lakh, the CA or CMA certificate on incidence is required — and the supplier must show that the tax was not collected from the recipient, which is why the arrangement has to be priced accordingly from the outset. Section 54(8): unjust enrichment →

Key takeaways

• Section 147 and Notification No. 48/2017-CT: four categories — Advance Authorisation, EPCG, EOU, and gold against Advance Authorisation.
• A deemed export is a taxable supply; tax is charged and paid, then refunded.
• Either the supplier or the recipient may claim — the default is the recipient.
• The supplier claims only on the recipient's two undertakings — no credit availed, and will not claim.
• Relevant date is the date the return relating to the deemed exports is furnished.
• Unjust enrichment applies to a supplier's claim, so the tax must not have been collected.

Read next

• Deemed Exports Under GST
• How to Claim a GST Refund on Deemed Exports
• Deemed Exports vs Physical Exports vs SEZ Supplies
• Section 54(8): Unjust Enrichment and the Exceptions

Disclaimer: Positions stated as on 5 September 2026, based on the CGST Act and Rules as amended to 31 March 2026 (ICAI Bare Law, 12th edition), Notification No. 48/2017-CT and Notification No. 49/2017-CT.