Rules 89 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.
Update (30 September 2026): Rules 89(4A), 89(4B) and 96(10) were omitted prospectively by Notification 20/2024-CT dated 08.10.2024, on the GST Council's 54th-meeting recommendation. They now matter only for exports and refund periods before the omission, including proceedings already started for those periods. For later periods, refunds for these suppliers follow the ordinary Rule 89(4) formula.
Most exporters compute a refund from a formula that spreads their whole credit pool across turnover. Two categories do not — they get a refund of the credit on specific inputs, and nothing else.
Rule 89(4A): in the case of supplies received on which the supplier has availed the benefit of Notification No. 48/2017-Central Tax — the deemed export notification — refund of input tax credit shall be granted to the extent of credit availed in respect of those inputs received under the said notification for export of goods, and the exporter shall not have availed the benefit of the specified duty-free notifications. Rule 89(4B): the same structure where the supplier has availed the benefit of the advance authorisation, EPCG or EOU notifications, or where the exporter itself imported inputs duty-free.
Why they exist
The ordinary Rule 89(4) formula gives an exporter a proportion of its whole Net ITC, spread across turnover. That works where the exporter paid tax on everything it bought.
Where an exporter has procured inputs duty-free — under advance authorisation, EPCG, EOU or the deemed export notification — it paid no tax on those inputs, and there is no credit to refund on them. Applying the ordinary formula would give it a share of credit attributable to other procurements, effectively refunding tax on inputs it did not use in the exports.
Rules 89(4A) and (4B) close that by confining the refund to the credit actually availed on the specific inputs received under those notifications.
Rule 89(4A): deemed export supplies received
Applies where the exporter received supplies on which the supplier availed the benefit of Notification No. 48/2017-CT — the deemed export notification.
The refund is of the input tax credit availed in respect of such inputs, received under that notification, for export of goods.
Two conditions attach:
- the exporter must not have availed the benefit of the specified duty-free import notifications;
- the claim is confined to those inputs, not to the general pool.
Rule 89(4B): duty-free imports and EOU supplies
Applies where the exporter:
- received supplies on which the supplier availed the benefit of Notification No. 40/2017-CT(R) or 41/2017-IT(R) — the merchant export notifications; or
- availed the benefit of Notification No. 78/2017-Customs (EOU) or Notification No. 79/2017-Customs (advance authorisation and EPCG) itself.
Again, the refund is of the credit availed in respect of inputs received under those notifications for export of goods.
The interaction with the ordinary formula
Both Rule 89(4) and Rule 89(5) exclude the (4A) and (4B) turnover and credit from their computations:
- Net ITC in Rule 89(4) is "other than the input tax credit availed for which refund is claimed under sub-rules (4A) or (4B)";
- Turnover of zero-rated supply of goods excludes "the turnover of supplies in respect of which refund is claimed under sub-rules (4A) or (4B)";
- Adjusted Total Turnover excludes the same.
So an exporter with a mix of ordinary and duty-free-route procurement runs two computations — the (4A) or (4B) claim on the identified inputs, and the ordinary Rule 89(4) formula on the rest, with the (4A)/(4B) figures stripped out of both sides.
That segregation is the practical work of the rule, and it requires the input-level tagging to exist in the first place. Rule 89(4): the zero-rated formula →
The Rule 96(10) counterpart (also omitted)
Rule 96(10) was the restriction on the other side: a person who had received supplies on which the benefit of the same notifications was availed, or who availed the customs notifications itself, could not claim refund of IGST paid on exports under Rule 96. It was omitted prospectively by Notification 20/2024-CT dated 08.10.2024, together with Rules 89(4A) and 89(4B).
So the scheme is:
| Procurement route | Export refund route |
|---|---|
| Ordinary, tax paid | Rule 96 with payment, or Rule 89(4) under LUT |
| Deemed export received | Rule 89(4A) under LUT; Rule 96 barred |
| Merchant export received, or duty-free import | Rule 89(4B) under LUT; Rule 96 barred |
An exporter that procures duty-free is confined to the LUT route and the specific-input refund.
Because the omission is prospective and has no savings clause, proceedings already started for earlier periods under Rule 96(10) remain live, and their fate is still being worked out. For exports after 08.10.2024 the restriction no longer applies.
Practical notes
- Tag inputs at procurement by the notification under which they were received. Neither sub-rule can be applied retrospectively from an untagged ledger.
- Segregate the credit in the ITC working, so the (4A)/(4B) credit is identifiable and can be excluded from Net ITC.
- Run two computations where procurement is mixed, and reconcile them to the total credit.
- Choose the export route deliberately. A business planning duty-free procurement is choosing the LUT route at the same time, whether or not it realises.
- Keep the supplier's declaration that it availed the notification benefit — the exporter's own claim depends on that fact.
- Model the working capital. The LUT route with a restricted refund is materially slower than the with-payment route, and duty-free procurement buys that at the cost of this.
Key takeaways
- Rule 89(4A): refund confined to credit on inputs received under the deemed export notification.
- Rule 89(4B): the same for merchant export supplies received and for EOU, advance authorisation and EPCG imports.
- Both are input-specific, not formula-based.
- Their credit and turnover are excluded from Rules 89(4) and 89(5).
- Rule 96(10), which barred such exporters from the IGST with-payment route, was omitted prospectively on 08.10.2024, along with Rules 89(4A) and 89(4B).
- The choice of procurement route determines the export refund route.
Read next
- Rule 89(4): The Zero-Rated Refund Formula
- Deemed Export Refunds: Who Claims
- Merchant Exports at 0.1%
- Rule 96: The Shipping Bill as a Refund Application
Disclaimer: Positions stated as on 5 September 2026, based on the CGST Rules as amended to 31 March 2026 (ICAI Bare Law, 12th edition) and the ICAI Handbook on Refunds under GST (January 2026). Updated 30 September 2026 per the ICAI Background Material on GST, 14th Edition (July 2026): Rules 89(4A), 89(4B) and 96(10) were omitted prospectively by Notification 20/2024-CT dated 08.10.2024.