GST ON COTTON TSHIRT EXPORT
This query is : Resolved
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
How can I claim the GST I am paying on input to prepare and export the cargo
Thanks
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.
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.
12 August 2025
Thanks Sir for clarifying my doubts.
I would like to know more about LUT, pls explain.
I would like to know more about LUT, pls explain.
15 August 2025
✅ What is LUT under GST?
LUT stands for Letter of Undertaking.
It is a document filed by exporters under GST (Goods and Services Tax) to export goods or services without paying IGST (Integrated GST).
🎯 Why is LUT Important?
Normally, when you export goods or services, you're supposed to pay IGST and then claim a refund.
But filing an LUT allows you to export without paying any IGST upfront — reducing cash flow pressure and avoiding the refund process.
✅ Who Can File LUT?
You can file an LUT if you are an exporter of goods or services, and:
You have not been prosecuted for any serious tax offence (tax evasion > ₹250 lakhs).
You are a regular GST-registered taxpayer (not a composition dealer).
🔁 When to File LUT?
LUT is filed once every financial year.
It’s valid until 31st March of that financial year.
You must renew or file a fresh LUT every year.
📝 Contents of LUT
When you file LUT, you agree to:
Export goods/services within the prescribed time (within 3 months for goods).
Follow GST rules strictly.
Pay IGST with interest if you fail to export on time.
📌 Filing Process – Step by Step (Online)
Step 1: Login
Go to: https://www.gst.gov.in
Login using your GST credentials.
Step 2: Navigate to LUT Filing
Click on "Services" > "User Services" > "Furnish Letter of Undertaking (LUT)"
Step 3: Choose the Financial Year
Select the relevant financial year for which you’re filing LUT.
Step 4: Fill Details
The form will auto-fill some basic information.
Fill in:
Place of business
Names and addresses of two witnesses
Authorized signatory details
Step 5: Submit and Sign
Tick the declaration boxes.
Use DSC (Digital Signature Certificate) or EVC (OTP-based verification).
After submission, you’ll get an Acknowledgment with ARN (Application Reference Number).
Step 6: Save Acknowledgement
Download the LUT PDF for your records.
🚫 What If You Don't File LUT?
If you don’t file an LUT:
You’ll be required to pay IGST at the time of export
Then claim a refund later (which is more time-consuming)
LUT stands for Letter of Undertaking.
It is a document filed by exporters under GST (Goods and Services Tax) to export goods or services without paying IGST (Integrated GST).
🎯 Why is LUT Important?
Normally, when you export goods or services, you're supposed to pay IGST and then claim a refund.
But filing an LUT allows you to export without paying any IGST upfront — reducing cash flow pressure and avoiding the refund process.
✅ Who Can File LUT?
You can file an LUT if you are an exporter of goods or services, and:
You have not been prosecuted for any serious tax offence (tax evasion > ₹250 lakhs).
You are a regular GST-registered taxpayer (not a composition dealer).
🔁 When to File LUT?
LUT is filed once every financial year.
It’s valid until 31st March of that financial year.
You must renew or file a fresh LUT every year.
📝 Contents of LUT
When you file LUT, you agree to:
Export goods/services within the prescribed time (within 3 months for goods).
Follow GST rules strictly.
Pay IGST with interest if you fail to export on time.
📌 Filing Process – Step by Step (Online)
Step 1: Login
Go to: https://www.gst.gov.in
Login using your GST credentials.
Step 2: Navigate to LUT Filing
Click on "Services" > "User Services" > "Furnish Letter of Undertaking (LUT)"
Step 3: Choose the Financial Year
Select the relevant financial year for which you’re filing LUT.
Step 4: Fill Details
The form will auto-fill some basic information.
Fill in:
Place of business
Names and addresses of two witnesses
Authorized signatory details
Step 5: Submit and Sign
Tick the declaration boxes.
Use DSC (Digital Signature Certificate) or EVC (OTP-based verification).
After submission, you’ll get an Acknowledgment with ARN (Application Reference Number).
Step 6: Save Acknowledgement
Download the LUT PDF for your records.
🚫 What If You Don't File LUT?
If you don’t file an LUT:
You’ll be required to pay IGST at the time of export
Then claim a refund later (which is more time-consuming)
Message likes :
1 times
16 August 2025
Thanks sir, your reply is precise and informative.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Applicability of TDS on CFS, CHA fees, and shipping line charges
- Notice from IT DEPTT IF FD AMOUNT EXCEEDS 10 LACS
- Applicablity on tds
- GST payable under RCM
- Unable to generate and save json file for updated return
- Tax audit & Switching from Presumptive taxation
- GSTR9- ITC
- Section 194I not showing in TDS RPU for Compnay Assessee for TDS on rent
- PRODUCT AND SERVICE CATEGORY CODE
- WRONGLY UPLOADED 10IF FOR COOPERATIVE SOCIETY
- Import purchase entry
- Rule 54(1A) for Distributing ITC
- EXCESS CREDIT REALTED GST REVERSAL
- Export invoice not reported
- CA Articleship Extension Matter
- GST OFFICER WRONG NOTICE
- "Please ensure that the Total of the Deductions u/s 54F match the same in Table D in Sch CG"
- Composition Dealer GST Annual Return Filing process
- Revision under Section 264 in The Income Tax Act, 1961
- TDS under section 195.
Trending Online Classes
-
LIVE Course on GSTR-9 & GSTR-9C (Technical | Practical | Concept - Based)
Sachin Jain03 November 2025
CAclubindia
