GST ON COTTON TSHIRT EXPORT

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Md Asif Iqubal (Querist)
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02 July 2025 I am preparing to export round neck cotton tshirts, CFR value is 575,000.00 INR. I need to know is GST applicable on export? What are the taxes I need to pay to export.

How can I claim the GST I am paying on input to prepare and export the cargo

Thanks

Asha Kanta Sharma online

Asha Kanta Sharma online

(Expert)
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12 August 2025 1. Is GST applicable on export of cotton T-shirts?
Exports are treated as ‘zero-rated supply’ under GST.
This means GST rate on export = 0%.
You don’t charge GST to your overseas buyer (export invoice is without GST).
However, GST is applicable on inputs/raw materials/services you procure domestically to manufacture these T-shirts.
2. Taxes payable on export
No GST on outward export supply (zero-rated).
You still have to pay GST on inputs/raw materials you buy, but you can claim Input Tax Credit (ITC) on those.
If you export goods, you can claim benefits via:
Refund of ITC on inputs and input services used for export, or
Export under bond or LUT (Letter of Undertaking) without payment of IGST.
3. How to claim GST paid on inputs?
Maintain proper input tax credit records for all inputs, input services, and capital goods.
For export shipments, file:
GSTR-1 (export invoice details),
GSTR-3B (claim ITC and declare exports),
Apply for refund of unutilized ITC on exports, if any.
Ensure you have:
Valid export invoices,
Shipping bills,
LUT or bond for exporting without IGST payment.
4. Additional points
If you export under LUT/bond, you don’t pay IGST on export but can claim refund of unutilized ITC.
If you pay IGST on exports (without LUT), you can claim refund of IGST paid.

Md Asif Iqubal

Md Asif Iqubal (Querist)
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12 August 2025 Thanks Sir for clarifying my doubts.
I would like to know more about LUT, pls explain.

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