Exporters play an important role in India’s economic growth. They not only boost Gross Domestic Product (GDP) but also generate foreign exchange earnings. The total exports in FY2025 stood at $820.93 billion, which is about 21% of the GDP. While exports are treated as ‘Zero-rated supplies’, exporters can still apply for Goods and Services Tax (GST) refund.

GST refund for export encourages global trade and also eliminates tax cascading for exporters. In this blog, we will understand everything about the GST refund application, forms, eligibility, and the step-by-step process.

Why are Exports Zero-Rated?

Exports are classified under Section 16 of the Integrated Goods and Services Tax (IGST) Act as “zero-rated” GST supplies. This means that 0% tax is imposed on the exports. Here is why exports are zero-rated:

• It helps to make Indian goods and services competitive in the global market.
• Reduces the overall tax burden for suppliers and exporters.
• Eliminates the tax component from the export price to lower production costs.
• Makes Exports more attractive globally.
• Promotes growth in exports to generate foreign exchange.
• Boosts economic growth and export volumes.

Eligible Export Supplies

Here are the supplies that are taxed at 0%:

• Goods exported outside India.
• Services provided to entities outside India.
• Supplies to Special Economic Zones (SEZs), unlike the scope of supplies that are not exempt from GST and are not allowed for an input tax credit (ITC).

As a result of zero-rated GST, exporters can claim refunds of Integrated Goods and Services Tax (IGST) paid and unused ITC. This removes the burden of taxation and improves the viability of exports with 25% merchandise export growth.

Refund Options for Exporters Under GST

There are two main ways for exporters to obtain a GST refund for export: either by way of a refund of the IGST paid on an export or by claiming Input Tax Credits (ITC) on inputs used in making zero-rated GST supplies.

Refund of Integrated Goods and Services Tax (IGST)

Exporters pay the IGST portion of their export duty using a Letter of Undertaking (LUT) or a Bond. They also claim a refund when they submit a shipping bill linked to the GST refund for the export process, which is automatically processed through the Indian Customs Electronic Data Interchange Gateway (ICEGATE).

Exporters who use this method can expect to receive 90% of their refund provisionally credited within 15 days of submitting their shipping bill. This method is generally ideal for good exporters because it ties together customs and GST to enable a smooth GST refund application process.

Claiming Unutilised Input Tax Credit (ITC)

Exporters can claim a refund of unutilised ITC that was accumulated from inputs purchased by them. However, the ITC must be utilised for making zero-rated GST supplies. The amount of unutilised ITC is determined by calculating:

Maximum Refund Amount:

This option is generally suited for service exporters and those using the LUT, as these exporters will need to submit a GST refund form, GST RFD-01, for a refund of unutilised ITC.

How to File RFD-01 for GST Refund?

GST refund applications are made electronically on the GST portal, usually by using the GST refund form RFD-01. RFD-01A is used for IGST paid exports, and RFD-01B in the case of exports where no tax is paid. Here is how to file RFD-01 for GST refund:

1. Visit the official GST portal and log in to your GST account.
2. Choose Services -> Refunds -> Application for Refund.
3. Choose the right category (for example, RFD-01A for export and RFD-01B if no tax is paid).
4. Specify the financial year (Like FY26) and the tax period (monthly/quarterly). Choosing a tax period is not required for an excess cash balance.
5. Click on ‘Create Refund Application’.
6. Next, open the RDF-01 form. Provide all the details, including the value of exports/supplies, ARN of returns, amount of ITC accumulated, and more.
7. Provide the bank details to which you want to receive the refund amount.
8. Upload the mandatory documents, like the invoice, shipping bills, bank realisation certificate, and more.
9. Preview your draft for any inaccuracies or errors, and then save the GST refund application.
10. Submit the RFD-01 form after providing all the required details and uploading the documents.

GST Refund Timeline

Here is the key timeline for the GST refund application in RFD-01:

• The GST refund for the export process will be completed in no longer than 60 days.
• 90% of the provisional amount will be credited within 7 days for 100% IGST refunds, and all amounts within 60 days for ITC.
• Quarterly filing is required after filing GSTR-3B. Claims may be barred if the delay exceeds 2 years.
• New reforms reduce the average time for refunds from 120 Days to 45 Days.

The Central Board of Indirect Taxes and Customs (CBIC) also plans to process 95% of refunds by 2025 digitally. Track your refund status through the GST Portal refund section.

Documents Required to File GST Refund for Export

The documents required for the GST refund application are as follows:

• LUT/Bond Copies: The documents required are tax invoices for each of the export transactions and copies of the Letter of Undertaking (LUT) or the bond submitted for zero-rated GST supplies.
• Tax Invoice: Export invoices that reflect the information like exporter and recipient names, GSTIN, invoice number and date, HSN code, description, value of goods/services, and the export destination.
• Shipping Bill or Bill of Export: Customs records that show the actual export of goods in India, which is identical to the invoice details.
• Export General Manifest (EGM): Certification that goods have been physically shipped out of the country, which is necessary in exporting goods.
• Bank Realisation Certificate (BRC) or Foreign Inward Remittance Certificate (FIRC): In the case of export of services, the evidence of the foreign exchange receipt is obligatory.
• GSTR-1 and GSTR-3B Returns: Recorded outward supply and tax information submitted on the GST portal in relation to the tax periods mentioned.
• Purchase Orders and Agreements: Purchase orders or service agreements are used to indicate the authenticity of the transactions.
• Acknowledgement Receipt Number (ARN): This is issued when an application to refund is submitted to track the refund.

Other supporting documents may include shipping bills signed by customs, debit/credit notes concerning exports, and any clarifications as demanded by GST officers.

GST Refund: Common Challenges and How to Avoid Them?

Here are the most common issues you will face during the GST refund process:

• Invoicing Errors: A Significant number of export invoices are rejected due to invoicing discrepancies between the exporter’s GSTR-1 and shipping documents, causing delays in GST refund applications.​
• Delayed FIRCs: Exporters are unable to provide proof of realisation when the Foreign Inward Remittance Certificate (FIRC) has expired beyond 9 months. This can result in their refunds being held up.
• Disallowed ITC: When exporters fail to comply with input requirements, they can have their ITC blocked. This can occur because of an inverted duty structure or due to a disallowance of capital goods, impacting zero-rated GST claims.
• Pitfalls in Missing Softex: Software exports without using Form Softex cannot be verified and therefore cannot realise service income.
• SEZ Invoice Issues: Unendorsed SEZ invoices can cause deficiency notices from the Customs Department. Supplies to Special Economic Zones need to be made on endorsed invoices.
• Export Price Anomalies: Domestic prices greater than 1.5 times the export price raise a red flag, which may lead to additional scrutiny and possible rejection.

GST refund for export prevents the cascading effect of taxes. This also allows businesses to improve cash flow. While the process is streamlined and digitised, you must avoid committing common issues for successful refunds.

Any delay in refunds can make exporters face cash flow challenges that can hamper business operations. This is where a business loan proves really useful. Apply for a business loan of up to ₹25 lakh with DMI Finance for sustainable export business growth.

Frequently Asked Questions (FAQs)

1. What is a Zero-Rated GST Supply?

Zero-rated GST supply refers to exports and supplies to SEZ that are exempt from GST as they are taxed at 0%. Exporters can claim input tax credit (ITC) refunds.

2. How can I file a GST Refund Application for Exports?

To file an application for a GST refund for exports, you will need to fill out the RFD-01 form on the GST portal and follow the necessary steps.

3. What is the processing timeline of GST refunds?

Provisional 90% of GST refund is issued within 7 working days, and the full GST refund is issued within 60 working days.

4. Can you get an ITC refund without having to pay the IGST?

Yes, you can get an ITC refund without paying the IGST by using the LUT (Letter of Undertaking), which is used for zero-rated GST supplies.

5. What are the most common reasons a GST refund would be rejected?

The most common reasons include document mismatches, delayed FIRCs, and ITC (Input Tax Credit) blocks.

6. What documents are required to file the GST refund form RFD-01?

To complete the GST refund form RFD-01, you must provide the invoices, shipping bills, GSTR (Goods and Services Tax Returns), and FIRCs (Foreign Inward Remittance Certificate).

7. Are there specific deadlines for filing export refund claims?

Yes, the deadlines for filing GST refund for export claims are 2 years from the relevant date, such as the date of the shipping bill.

8. How is an IGST refund different from an ITC refund?

An IGST refund automatically processes through customs, while an ITC refund requires that an application be filed.

9. How to track a GST refund status?

First, you have to visit the GST portal. Then, under services, click on refunds and then track status.

10. What will happen if my refund is delayed beyond 60 days?

You have to escalate the discrepancy via the GST portal. Interest will be applied at 6%.