Export Refund under GST (Section 54(3)

Exports are treated as zero-rated supplies under the Goods and Services Tax (GST) law, ensuring that exporters do not bear the burden of indirect taxes. To support exporters’ cash flow, Section 54(3) of the CGST Act, 2017 allows a refund of unutilised Input Tax Credit (ITC) or IGST paid on exports, subject to prescribed conditions and procedures.

This blog explains export refund under GST, types of export refunds, timelines, documents required, and the refund process in a simple and practical manner.

What is Export Refund under GST?

Export refund under GST refers to the refund of taxes paid or accumulated input tax credit on goods or services exported outside India. Since exports are zero-rated, the tax paid on inputs used for exports should not become a cost to the exporter.

As per Section 54(3) of the CGST Act, a registered person may claim a refund of unutilised ITC at the end of any tax period, except in certain notified cases.

Legal Provision – Section 54(3) of CGST Act

Section 54(3) allows refund of unutilised input tax credit in the following cases:

  1. Zero-rated supplies made without payment of tax
  2. Accumulation of ITC due to inverted duty structure (restricted for exports)

For exports, refund is primarily claimed under zero-rated supply provisions.

Types of Export Refund under GST

There are two main types of export refunds available to exporters:

1. Refund of IGST Paid on Exports

In this method, the exporter:

  • Pays IGST on export invoice
  • Files GST returns
  • Claims refund of IGST paid

Key Points:

  • Applicable to exports of goods and services
  • Shipping bill acts as refund application
  • Refund is processed automatically after:
    • Filing of GSTR-1
    • Filing of GSTR-3B

Best For: Exporters with sufficient working capital

2. Refund of Unutilised ITC (Export under LUT/Bond)

In this method, the exporter:

  • Exports goods/services without payment of IGST
  • Furnishes LUT (Letter of Undertaking) or Bond
  • Claims refund of accumulated ITC

Key Points:

  • No tax paid at the time of export
  • Refund claimed by filing Form GST RFD-01
  • Suitable for regular exporters

Best For: MSMEs and exporters with cash-flow constraints

Export of Goods vs Export of Services (Refund Perspective)

Export of Goods

  • Goods must physically leave India
  • Shipping bill and export invoice mandatory
  • Refund linked with ICEGATE and GST portal

Export of Services

  • Supplier located in India
  • Recipient located outside India
  • Payment received in convertible foreign exchange
  • Place of supply outside India

Maximum Time Limit to Claim Export Refund

Time Limit for Filing Refund Application

  • Refund must be claimed within 2 years from the relevant date

Relevant Date for Exports:

  • Export of goods → Date of shipment (as per shipping bill)
  • Export of services → Date of receipt of foreign exchange

Time Limit for GST Department to Grant Refund

As per GST law:

  • Refund should be sanctioned within 60 days from the date of receipt of complete refund application
  • If delayed beyond 60 days:
    • Interest @ 6% per annum is payable to the exporter

Documents Required for Export Refund under GST

The following documents are generally required while filing export refund claims:

Common Documents:

  • GST registration certificate
  • LUT / Bond (if export without IGST)
  • GSTR-1 and GSTR-3B filings
  • GST refund application (Form RFD-01)

For Export of Goods:

  • Export invoice
  • Shipping bill / Bill of export
  • EGM (Export General Manifest)
  • Bank account details

For Export of Services:

  • Export invoice
  • Foreign Inward Remittance Certificate (FIRC)
  • Bank Realisation Certificate (BRC)
  • Contract / agreement (if required)

Step-by-Step Process to Claim Export Refund under GST

  1. File GSTR-1 with export details
  2. File GSTR-3B for the tax period
  3. Ensure LUT is filed (if applicable)
  4. File refund application in Form GST RFD-01
  5. Upload supporting documents
  6. Respond to clarification (if any)
  7. Refund sanctioned and credited to bank account

Common Reasons for Export Refund Delay or Rejection

  • Mismatch between GSTR-1 and GSTR-3B
  • Incorrect shipping bill details
  • LUT not filed or expired
  • Incomplete documentation
  • Bank account not validated

Professional review helps reduce rejections significantly.

Benefits of Export Refund under GST

  • Improves exporter’s cash flow
  • Reduces working capital blockage
  • Encourages international trade
  • Ensures zero tax burden on exports
  • Promotes competitiveness of Indian exporters

Export Refund under GST – Key Compliance Tips

  • File GST returns timely and accurately
  • Reconcile GST data with shipping bills
  • Maintain proper export documentation
  • Track refund status regularly
  • Seek professional support for large claims

Conclusion

Export refund under GST as per Section 54(3) is a vital relief mechanism for exporters, ensuring that taxes do not become a cost in international trade. By choosing the correct refund method, maintaining accurate documentation, and following timelines, exporters can ensure smooth and timely refunds.

Proper compliance and professional assistance can significantly speed up the refund process and avoid unnecessary delays.

Need Help with GST Export Refund?

Our Financial Advisor provide end-to-end GST export refund services, including LUT filing, refund application, reconciliation, and follow-ups with the GST department.

Regards
Our Financial Advisor
www.ourfinancialadvisor.in