GST on Export in India —
Zero-Rated, Not Exempt
How exports are zero-rated under the IGST Act, when to file an LUT vs pay IGST, how to claim your ITC refund, and the rules for services, SEZ and deemed exports.
Exports are a zero-rated supply (0% GST) under Section 16 of the IGST Act — not exempt. The exporter charges no GST to the foreign buyer yet still recovers every rupee of input tax. You have two routes: (a) export under LUT (file Form RFD-11 once a year) without paying IGST and claim a refund of accumulated ITC, or (b) pay IGST on the export and claim a cash refund. Most regular exporters use the LUT route to avoid blocking working capital.
Export GST Treatment — Decision Table
Every common export scenario, whether it is zero-rated, how you recover tax, and the key form to file.
| Export Type | Zero-Rated? | How You Recover Tax | Key Form |
|---|---|---|---|
| Goods export — under LUT | Yes | ITC refund on inputs | RFD-11 + RFD-01 |
| Goods export — with IGST paid | Yes | IGST cash refund (automated) | GSTR-1 Table 6A |
| Service export — under LUT | Yes | ITC refund on inputs | RFD-11 + RFD-01 |
| Service export — with IGST paid | Yes | IGST refund | RFD-01 |
| Supply to SEZ unit / developer | Yes | ITC refund or Nil IGST via LUT | RFD-11 + RFD-01 |
| Deemed exports (Advance Auth., EOU) | Deemed | Supplier or recipient refund | RFD-01 |
| E-commerce exports (courier / postal) | Yes | Same as goods export | RFD-11 + GSTR-1 |
Exports remain zero-rated under Section 16 IGST Act — the GST 2.0 two-slab reform (22 September 2025) did not change export zero-rating. Confirm current procedure on the official GST portal before filing.
A zero-rated supplier charges 0% but can claim and refund ITC on inputs. An exempt supplier also charges 0% but cannot claim any ITC and must reverse it. Because exports are zero-rated (not exempt), every tax paid inside India is refunded, so no Indian GST cost reaches the foreign buyer.
LUT Route vs Pay-IGST-and-Refund
Both routes are fully zero-rated — the difference is cash flow. Under LUT you never pay IGST; on the pay-IGST route you pay first and wait for the refund.
Export under LUT — no IGST paid
- File Form RFD-11 once per financial year
- Export without charging any IGST
- Working capital never blocked
- Claim refund of accumulated ITC via RFD-01
- Preferred by regular exporters
Pay IGST, then claim refund
- Pay IGST upfront on the export invoice
- Goods: automatic refund via ICEGATE match
- Services: claim refund through RFD-01
- Useful for occasional exporters
- Working capital blocked until refund credited
Filing the LUT (Letter of Undertaking)
- File under Services › User Services › Furnish Letter of Undertaking (LUT) — approved almost instantly, no physical submission.
- An LUT is valid for one financial year (Apr–Mar) and must be renewed before the first export invoice of the new year.
- Open to any registered exporter not prosecuted for tax evasion of ₹2.5 crore or more in the preceding period.
- After approval, export goods or services without IGST and reclaim input tax through the LUT refund route.
An LUT does not roll over automatically. If it lapses on 31 March and you export before filing a fresh RFD-11, that export can be treated as made without a valid LUT — potentially requiring IGST payment with interest. Diarise LUT renewal before your first April export invoice.
Not sure whether LUT or paying IGST suits your cash flow?
Talk to a GST Expert →ITC Refund Process for Exporters (LUT Route)
When you export under LUT without paying IGST, input tax accumulates because there is no output GST to set it off against. You claim it back as a cash refund:
- Report export invoices in GSTR-1 (Table 6A for goods) with shipping-bill details, and declare zero-rated supplies in GSTR-3B.
- Apply on the portal via Form RFD-01 with export invoices, shipping bills and foreign inward-remittance certificates (FIRC / BRC).
- The officer issues an ARN and must process the refund within 60 days; ensure GSTR-1 and shipping-bill data match to avoid queries.
- Claim within 2 years of the relevant date — see the refund time limit rules; do not let claims lapse.
How Much You Recover — ₹10L Export
LUT Export without IGST
IGST Export with payment
Either way the exporter bears zero net GST. The LUT route simply avoids parking ₹1.8 lakh with the government while the refund is processed.
Want your export refunds filed and tracked end-to-end?
Get Refund Help →Export of Services, SEZ & Deemed Exports
A supply of services is treated as an export of services (and hence zero-rated) only when all five conditions of Section 2(6) of the IGST Act are met:
- Supplier is located in India
- Recipient is located outside India
- Place of supply is outside India
- Payment received in convertible foreign exchange (or RBI-permitted INR)
- Supplier and recipient are not mere establishments of the same person
Typical zero-rated service exports: IT and software services, BPO/KPO, consulting, design and engineering for overseas clients. See the detailed GST on export of services guide.
| Supply | Treatment | Who Claims Refund |
|---|---|---|
| Supply to SEZ unit / developer | Zero-rated (LUT or IGST) | Supplier |
| Deemed export — Advance Authorisation | Deemed export (Nil / refundable) | Supplier or recipient |
| Supply of capital goods to EOU | Deemed export | Supplier or recipient |
| High-sea / merchant export | Zero-rated with conditions | Merchant exporter |
In deemed-export cases the refund is claimed by the supplier or the recipient — not both. See the SEZ and deemed-export refund guides for documentation.
If any of the five service-export conditions fails — for example payment received in INR where not RBI-permitted, or the foreign client is a branch of the same Indian group company — the supply is not an export of services and normal GST applies. Get borderline cases reviewed before you invoice.
Supplying to an SEZ or under Advance Authorisation?
Check My Treatment →Exporter GST Compliance Checklist
The full compliance picture for a goods or services exporter operating under the zero-rated regime:
- GST registration (GSTIN)
- Fresh LUT (RFD-11) each financial year
- LUT number quoted on export invoices
- GSTR-1 Table 6A with shipping-bill data
- GSTR-3B declaring zero-rated supplies
- Bank account validated on GST portal
- FIRC / BRC for service exports
- RFD-01 refund within 2 years
- ICEGATE ↔ GSTR-1 reconciliation
- GSTR-9 annual return
- AD Code registration at port
- Books & export records upkeep
Most export refunds get delayed not by the law but by data mismatches — a shipping-bill number that differs from GSTR-1, an unvalidated bank account, or a missing FIRC. Clean reconciliation between your invoices, GSTR-1 and the ICEGATE shipping bills is what gets refunds credited in weeks, not months.
Frequently Asked Questions
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