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India’s GST law gives eligible exporters two routes for zero-rated supplies: export without paying integrated tax under a bond or Letter of Undertaking (LUT), then claim eligible unutilized input tax credit (ITC); or, where permitted, pay integrated tax on the export and claim a refund. The route determines the paperwork and refund process. An export is not automatically a promise that every tax amount will be refunded.
What zero-rated supply means for GST refunds
Under section 16 of the IGST Act, exports of goods or services and supplies to a Special Economic Zone (SEZ) unit or developer are zero-rated. Zero-rating preserves input-tax-credit and refund routes, subject to the conditions and restrictions in the GST laws. It is different from treating a supply as simply exempt: eligible credit may be available, but the amount and route depend on the claim and applicable rules.
The two options below are statutory routes, not guarantees of eligibility. Check the current consolidated law and GST portal instructions for the filing date and the facts of the transaction.
Choose the refund route
| Question | Without payment of integrated tax under bond/LUT | On payment of integrated tax |
|---|---|---|
| What is paid on the zero-rated supply? | No integrated tax is paid on the supply under this option. | Integrated tax is paid on the supply. |
| What refund is sought? | Eligible unutilized ITC, subject to the statutory formula and conditions. | Refund of integrated tax paid, subject to the procedure for the relevant export. |
| Key records or process | Bond or LUT in FORM GST RFD-11 before supply, the correct invoice endorsement, and applicable refund application and supporting statements. | For exported goods, the shipping-bill procedure, export manifest/report, valid return and matched export data. |
| Important boundary | Rule 96A deadlines and consequences apply; verify the operative text for the relevant filing date. | The shipping-bill deemed-application process described here applies to goods, not automatically to export services. |
The statutory options are set out in section 16 of the IGST Act. Refund applications and evidence requirements are addressed in the CGST refund rules. Which option fits depends on the exporter’s circumstances, available credits and current eligibility rules; neither is universally better.
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How the bond or LUT route works
A registered person making a zero-rated supply without payment of integrated tax must furnish a bond or LUT in FORM GST RFD-11 to the jurisdictional Commissioner before making the supply. Rule 96A links the undertaking to deadlines for exporting goods and receiving qualifying payment for exported services. If the requirements are not met and no extension applies, tax and interest consequences may follow. Because deadlines can change through amendments, check the operative consolidated rule rather than relying on an older version of the rules. See rule 96A in the CGST rules.
For a refund of unutilized ITC, the amount is not simply all tax paid on purchases. The rules use a formula involving zero-rated turnover, net ITC and adjusted total turnover; the statutory definitions affect the calculation. The applicant must debit the electronic credit ledger by the refund amount claimed. The refund rules also specify invoice information for inputs and input services for the relevant period.
Documents and records to prepare
Use this checklist to organize records, then confirm the current refund category and supporting requirements on the GST portal. The applicable electronic application for refund categories covered by the rules is FORM GST RFD-01; statements and evidence vary by claim.
- Export invoice: Use the endorsement for the selected route, and ensure the invoice contains the prescribed particulars.
- Exported goods: Match the shipping bill or bill of export details to the export invoice. The refund rules call for a statement of shipping-bill or bill-of-export numbers and dates and corresponding export-invoice numbers and dates.
- Exported services: Keep invoice numbers and dates, together with relevant Bank Realization Certificate (BRC) or Foreign Inward Remittance Certificate (FIRC) particulars.
- Unutilized ITC claim: Prepare the invoice statement for inputs and input services for the period, reconcile credit and turnover figures to the statutory formula, and account for the required electronic credit ledger debit.
- Goods shipping-bill refund route: Check that the export manifest or report and valid return conditions have been met; the shipping bill alone does not satisfy the deemed-application conditions.
- Bond/LUT route: Retain the RFD-11 undertaking or reference and track the applicable rule 96A deadlines and any formally allowed extension.
These requirements are described in the CGST refund rules and, for LUT obligations, rule 96A.
Required export invoice endorsement
The prescribed wording depends on the route. For payment of integrated tax, the invoice endorsement is “SUPPLY MEANT FOR EXPORT ON PAYMENT OF IGST”. For supply under bond or LUT without payment, it is “SUPPLY MEANT FOR EXPORT UNDER BOND OR LETTER OF UNDERTAKING WITHOUT PAYMENT OF IGST”. The wording appears in the CBIC invoice rules.
How the shipping-bill refund works for exported goods
For integrated tax paid on exported goods, rule 96 treats the shipping bill as the refund application. It is deemed filed only once the export manifest or report covering that shipping bill has been filed and the exporter has furnished a valid return. The rules provide for electronic data exchange between the common portal and Customs for export confirmation and refund processing. This goods-specific procedure should not be assumed to apply to exported services. See rule 96 in the CGST rules.
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Narrow exception for exempt or non-GST goods
CBIC has clarified that a bond or LUT cannot be insisted upon for a refund claim involving exports without integrated tax of exempt or non-GST goods. This is a limited clarification; it does not remove the ordinary LUT requirement for taxable exports made without payment of integrated tax. Other applicable legal requirements may still apply. See the CBIC clarification and its follow-up circular.
Export duty and other statutory restrictions can also affect ITC refund eligibility. An older CBIC GST refund FAQ discusses this limitation; check current consolidated law rather than treating a legacy FAQ as current filing instructions.
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Check current requirements before filing
GST refund rules, forms and portal workflow can change. Confirm the current consolidated law, applicable refund category and live portal instructions before filing. Eligibility—including whether a transaction meets the export-of-services definition, whether a claim is restricted, and which evidence is required—depends on the particular facts and records. The rules summarized here do not establish that a particular exporter qualifies or predict a processing time.
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