GST on Export in India — Zero-Rated, Not Exempt

Exports are zero-rated, not exempt — and the difference is crucial. A zero-rated supplier charges 0% but can still claim and get a refund of Input Tax Credit on inputs. An exempt supplier charges 0% but cannot claim any ITC and must reverse it. Because exports are zero-rated, all Indian tax paid on inputs is recovered by the exporter.

No. The GST 2.0 rationalisation effective 22 September 2025 restructured domestic goods and services into a two-slab 5%/18% system (plus a 40% demerit rate), but it did not alter export zero-rating. Exports of goods and services remain zero-rated under Section 16 of the IGST Act, and the LUT and refund mechanisms continue unchanged.

Both are zero-rated routes; the difference is cash flow. Under LUT you file Form RFD-11 once a year and export without paying IGST, then claim a refund of accumulated ITC via RFD-01 — working capital is never blocked. On the pay-IGST route you charge and pay IGST on the export, then claim it back as a cash refund (automated via ICEGATE for goods, RFD-01 for services). Regular exporters usually prefer LUT.

Form GST RFD-11 is the Letter of Undertaking that lets a registered exporter supply goods or services without paying IGST. It is filed online on the GST portal, accepted almost instantly, and is valid for one financial year. Any registered exporter can file it provided they have not been prosecuted for tax evasion of ₹2.5 crore or more in the preceding period.

An LUT is valid only for the financial year in which it is filed (April to March) and does not renew automatically. You must file a fresh RFD-11 before raising your first export invoice of the new financial year. If the LUT lapses and you export without a valid one, the export can be treated as made without LUT, potentially requiring IGST payment with interest.

Any GST-registered exporter of goods or services (including supplies to SEZ) can file an LUT, except a person who has been prosecuted for any offence involving tax evasion of ₹2.5 crore or more. Those who are ineligible must export on payment of IGST and claim a refund instead.

For goods exported with IGST paid, the refund is largely automated through the ICEGATE-GST linkage and is often credited within a couple of weeks of matching. For ITC refunds under LUT via RFD-01, the officer has 60 days from the acknowledgement (ARN) to process; in practice most are processed within 30–45 days if documentation is complete. Mismatches between GSTR-1 and shipping-bill data are the main cause of delay.

File your LUT (RFD-11), export without IGST, report the exports in GSTR-1 Table 6A and declare zero-rated supplies in GSTR-3B. Then file Form RFD-01 on the portal with your export invoices, shipping bills and foreign inward-remittance certificates. The officer issues an ARN and must process it within 60 days, crediting the refund to your validated bank account.

Refund applications must be filed within 2 years from the relevant date — broadly the date the goods leave India, or the date of receipt of payment / issue of invoice for service exports. Claims filed after this period are time-barred, so exporters should file refunds promptly rather than accumulating them.

No. For goods exported on payment of IGST, no separate RFD-01 is required. You file GSTR-1 with export details (Table 6A) and GSTR-3B; the Customs system (ICEGATE) matches the shipping-bill data with GSTR-1, and the IGST refund is transmitted electronically to your registered bank account. Correct, matching bank and shipping-bill details are essential.

All five conditions of Section 2(6) of the IGST Act must be met simultaneously: (1) the supplier is in India; (2) the recipient is outside India; (3) the place of supply is outside India; (4) payment is received in convertible foreign exchange (or INR where RBI permits); and (5) the supplier and recipient are not merely establishments of the same person. If any one fails, it is not an export of services and normal GST applies.

No GST is charged to the foreign client, because software, IT and BPO/KPO services supplied to overseas recipients are zero-rated exports of services when the five conditions of Section 2(6) are met. The exporter files an LUT to export without IGST and claims a refund of ITC on inputs, or pays IGST and claims a cash refund via RFD-01.

Supplies of goods or services to an SEZ unit or developer are treated as zero-rated, just like physical exports. The supplier can either supply under LUT without IGST and claim an ITC refund, or pay IGST and claim a refund. Proper endorsement of the supply as "authorised operations" of the SEZ is required to support the refund.

Deemed exports are specified domestic supplies of goods treated as exports for GST-benefit purposes even though the goods do not leave India — for example supply against Advance Authorisation, supply of capital goods to EOUs, and supplies to EOU/EHTP/STP/BTP units. They can be supplied at Nil or refundable GST, and the refund may be claimed either by the supplier or the recipient (not both).

Yes. A freelancer or professional supplying services to overseas clients that meet the five export conditions is making a zero-rated export of services. Once registered, they can file an LUT and export without charging IGST, then claim a refund of ITC on business inputs. Payment must be received in convertible foreign exchange (or RBI-permitted INR) and supported by FIRC/BRC.