GST Refund Claims (Exports & IGST)

It is the mechanism by which an exporter recovers, in actual cash, either the IGST paid on export invoices or the input tax credit accumulated on purchases used to make export/SEZ supplies. Exports are 'zero-rated' under the IGST Act, meaning the government does not want embedded domestic tax to make Indian exports less price-competitive abroad — the refund is how that principle is delivered in practice.

If you charged and paid IGST on your export invoice, you claim a refund of that IGST paid — for goods, this is largely automated through the shipping bill and GSTR-1/GSTR-3B data exchange with Customs, with no separate RFD-01 needed in the ordinary course. If you invoiced under a valid LUT without charging IGST, you instead claim a refund of the input tax credit accumulated on your purchases, computed under the Rule 89(4) formula and filed through Form RFD-01.

The IGST-paid route for goods is generally the fastest, since the shipping bill is deemed to be the refund application and the process is largely automated between Customs (ICEGATE) and GSTN once the GSTR-1 and GSTR-3B for the relevant period are correctly filed and the Export General Manifest is filed by the carrier. The LUT/ITC refund route under Rule 89(4) requires a manually prepared and filed Form RFD-01, and is subject to officer review, acknowledgement, and possible scrutiny — typically a longer cycle even when the claim is entirely clean.

Rule 89(4) computes the maximum refundable ITC as: Net ITC × (Export turnover of goods and services) ÷ Adjusted Total Turnover, for the relevant tax period. 'Net ITC' means input tax credit availed during the period, other than ITC that is ineligible or blocked under Section 17(5). 'Export turnover' includes zero-rated supplies of goods and services made during the period (subject to specific value-capping rules where the FOB value of goods differs materially from the invoice value). 'Adjusted Total Turnover' broadly captures the taxpayer's total turnover for the period, adjusted for certain exclusions specified in the rule.

Under Section 54 of the CGST Act, a refund application must be filed within two years from the 'relevant date.' For goods exported by sea or air, this is the date the ship or aircraft leaves India. For goods exported by land, the date the goods cross the frontier. For goods exported by post, the date of despatch. For export of services, generally the date of receipt of payment in convertible foreign exchange, or the date of the invoice where payment is received in advance of the service being rendered. There is no condonation mechanism — a claim filed even a single day after the two-year window closes is time-barred.

A deficiency memo is issued by the proper officer within 15 days of filing if the application, or the documents accompanying it, are found to be incomplete or defective. Crucially, a deficiency memo means the original application is treated as not filed at all for the purposes of the process — you must file a fresh, corrected application. The original ARN does not remain valid, and the fresh application must still be filed within the overall two-year limitation period.

Yes. For refund claims relating to zero-rated supplies, the law permits the proper officer to sanction 90% of the claimed refund amount on a provisional basis within 7 days of issuing the acknowledgement (Form RFD-02), pending full verification. The balance is settled at final sanction. This provisional route exists specifically to ease exporter cash flow while the complete verification takes place.

RFD-01 is the refund application itself, filed online. RFD-02 is the acknowledgement issued when the application is found complete. RFD-03 is the deficiency memo issued when the application is incomplete or defective, requiring a fresh filing. RFD-04 (where used) is a provisional refund sanction order. RFD-05 is the payment advice authorising the actual credit to the bank account. RFD-06 is the final refund sanction order, which may sanction the claim in full, in part, or reject it, with reasons.

The most frequent causes we encounter: a shipping bill-invoice value mismatch, the Export General Manifest not being filed by the carrier (which silently blocks automated Rule 96 processing), unreconciled GSTR-1/GSTR-3B/GSTR-2B figures, a bank account not validated on the GST portal, missing or mismatched FIRCs for services exports, incorrect application of the Rule 89(4) formula (particularly around what is excluded from 'Net ITC'), and — the most serious category — a genuine doubt about whether the underlying supply actually qualifies as 'export' under Section 2(6) of the IGST Act, most commonly in intra-group or branch/head-office services billing.

Only if the arrangement genuinely meets the 'export of services' definition under Section 2(6) of the IGST Act — supplier in India, recipient outside India, place of supply outside India, payment received in convertible foreign exchange (or RBI-permitted INR), and the supplier and recipient are not merely 'establishments of a distinct person' under Explanation 1 to Section 8 of the IGST Act. If your Indian entity is a branch or liaison office of the same legal entity as the overseas parent — rather than a separately incorporated subsidiary — the supply is between establishments of the same person and does not qualify as an export, and no refund can properly be claimed on that basis.

Yes. The Rule 89(4) refund route is available specifically to exporters and SEZ suppliers who have made the zero-rated supply without payment of IGST — which requires a valid Letter of Undertaking (or, in restricted cases, a bond with bank guarantee) covering the invoice dates in the claim period. If invoices were raised without a valid LUT for that financial year, the correct GST treatment is that IGST should have been charged, and the Rule 89(4) ITC refund route does not apply to those specific invoices.

An inverted duty structure refund arises when the GST rate on inputs is higher than the rate on the output supply, resulting in accumulated ITC that cannot be fully utilised against output tax liability — this is available under Rule 89(5) and is a distinct concept from export refunds, though both can result in accumulated, unutilised ITC. A business can, in principle, have both export activity and an inverted duty structure on its domestic supplies, but the two refund computations use different formulas and should not be conflated or double-counted in a single claim.

The core requirement is that the shipping bill filed with Customs matches the invoice details declared in GSTR-1, that the corresponding GSTR-3B for the period is filed with the correct IGST payment reflected, and — critically — that the Export General Manifest (EGM) has been filed by the shipping line, airline, or courier confirming the goods have actually left India. Any of these three not lining up will hold the automated refund even if the exporter has done everything correctly on their own side.

For goods exporters using the automated Rule 96 route with clean shipping bill, EGM, and GSTR filings, refunds have historically credited in as little as 7–20 days in the ordinary course, though actual timelines vary with portal processing volumes and any individual mismatch. For Rule 89(4) LUT/ITC refund claims filed via RFD-01, a complete, unqueried application typically takes several weeks from filing to final sanction; a claim that attracts a deficiency memo, scrutiny query, or partial sanction takes materially longer. The law itself targets sanction within 60 days of a complete application, with interest payable under Section 56 for delay beyond that attributable to the department.

Yes. Under Section 56 of the CGST Act, if a refund is not sanctioned within 60 days of the date of receipt of a complete application, interest is payable on the delayed amount at the rate prescribed under the CGST Rules, computed from the expiry of that 60-day period until the date of actual refund. This interest is not automatic in practice — it typically needs to be specifically computed and claimed as part of the sanction process.

Yes — a proper officer can reject a refund claim in full, or sanction it only in part, through a reasoned order (Form RFD-06) after giving the applicant an opportunity to be heard where the claim is proposed to be rejected. If the rejection is not well-founded on the facts or the law, the applicant can file an appeal before the jurisdictional Appellate Authority within the statutory limitation period — generally three months from the date of the order, with a further one-month condonable delay on sufficient cause shown.

The GST rate rationalisation of September 2025, which restructured most domestic goods and services onto a simplified 5%/18%/40% slab framework, governs the rate applicable to domestic taxable supplies. Export and SEZ supplies remain zero-rated regardless of what domestic slab the underlying goods or services would otherwise attract, so the export invoice itself is unaffected. However, the rate change directly affects the ITC pool used in the Rule 89(4) 'Net ITC' computation, since that credit arises from GST paid on domestic inputs, input services, and capital goods at the applicable domestic rate — a rate change on the input side changes the refund computation inputs going forward.

No. A composition taxpayer under Section 10 of the CGST Act is restricted to intra-state supply and cannot make exports, inter-state supplies, or supplies to SEZ units — this restriction is inherent to the scheme itself, and neither the IGST-paid nor the LUT/ITC refund route is available to a composition dealer. A business with any genuine export activity must be registered under the regular scheme.

No — a refund claim is filed for one or more consecutive tax periods within the same financial year, consolidating all eligible export invoices for that period into a single RFD-01 application (for the LUT/ITC route) rather than filing invoice-by-invoice. For the automated Rule 96 route, the shipping bill/GSTR-3B linkage effectively processes at the period level as returns are filed, again without an invoice-by-invoice separate application.

At minimum: the LUT acknowledgement for the relevant financial year (where applicable), every export invoice with the correct endorsement, shipping bills and EGM confirmation (goods) or FIRC/BRC (services) matched to each invoice, GSTR-1/GSTR-3B/GSTR-2B for every relevant period, the Rule 89(4) computation working papers for every RFD-01 filed, the ARN, RFD-02 acknowledgement, and final RFD-06 sanction order for each claim, and correspondence relating to any deficiency memo or scrutiny query raised. These should be retained for at least the statutory record-retention period under Section 36 of the CGST Act.

A supply to an SEZ developer or unit for authorised operations is zero-rated under Section 16 of the IGST Act, exactly as a physical export is. The refund mechanics broadly follow the same LUT/ITC route (Rule 89(4)) if supplied without payment of tax, or the IGST-paid route if tax was charged and paid — but the SEZ route additionally requires an endorsement from the specified SEZ officer confirming receipt of the goods or services for authorised operations, and a declaration that the SEZ unit itself has not separately availed input tax credit on the same supply.

The IEC is a DGFT-issued code required for customs clearance of physical goods exports and imports; it is legally distinct from the GST refund process, which is governed by the CGST/IGST Acts and administered on the GST portal. However, in practice, a valid and correctly linked IEC is generally necessary for goods exports to clear Customs and generate the shipping bill and EGM data that the GST refund process (Rule 96) depends on — so while the GST refund claim itself does not require IEC as a document, the underlying export activity for goods typically cannot happen without one.

Partial sanction happens when the proper officer accepts part of the claimed amount but disallows a portion — commonly due to a specific invoice being excluded for a documentation gap, a portion of ITC being treated as ineligible, or a computational disagreement on the Rule 89(4) formula inputs. The order (RFD-06) will specify reasons for the shortfall. PNPC reviews the reasoning against the underlying facts and either accepts the partial sanction (where the officer's basis is sound) or files an appeal for the disallowed portion within the statutory window where it is not.

Yes, in principle — the refund itself is tied to the two-year limitation period from the relevant date of export, not to the timeliness of the underlying GST return filing. However, since the refund computation depends on GSTR-1, GSTR-3B, and GSTR-2B data for the relevant period, a delayed return filing pushes back when the refund claim can practically be prepared and filed, and any late fee or interest on the delayed return itself is a separate and additional consequence that does not affect refund eligibility on its own.

A low-cost or self-filed application typically takes the figures the business provides at face value and submits them. PNPC independently reconciles GSTR-1, GSTR-3B, and GSTR-2B for every period in the claim, verifies shipping bill and EGM status directly (for goods), matches every services invoice to its FIRC/BRC, tests the underlying export/SEZ classification before assuming it is correct, rebuilds the Rule 89(4) computation from source ledgers rather than accepting a client spreadsheet, and files only once the numbers are internally consistent — because a mismatched claim invites a deficiency memo or scrutiny that costs far more time than the reconciliation would have taken upfront.

A refund cannot be processed or credited while the applicant's GSTIN is under suspension, since suspension restricts most portal-based transactions including refund disbursement. If suspension occurs after a claim has been filed but before sanction, the priority becomes resolving the underlying reason for suspension (commonly a return-filing default or a proceedings-related suspension) so that the GSTIN is restored to active status and the refund process can proceed or be disbursed.

In our experience, services export refund claims tend to draw more scrutiny on the classification question — specifically, whether the arrangement genuinely qualifies as export of services under Section 2(6) of the IGST Act, particularly the 'distinct persons' test in cross-border group or branch/head-office billing. Goods export claims, especially under the automated Rule 96 route, are more likely to face document-matching issues (shipping bill, EGM) than substantive classification disputes, since a physical shipment leaving India is more readily verifiable than the more abstract 'place of supply' and 'distinct persons' tests applicable to services.

No. There is no government fee prescribed for filing Form RFD-01 or for the automated Rule 96 process — both are free, portal-based or Customs-linked mechanisms. Professional fees for reconciliation, computation, filing, and representation during scrutiny are a separate matter agreed with your CA firm, and are typically structured to reflect the genuine effort involved rather than as a flat percentage of the refund amount.

For clients spanning India and the UAE — an Indian subsidiary billing a Dubai parent, an Indian manufacturer exporting to UAE buyers, or a UAE group setting up Indian export operations — PNPC coordinates the India-side GST refund process (classification, LUT/ITC computation, RFD-01 filing, scrutiny response) from our Chennai, Bangalore, and Hyderabad offices, alongside our Dubai office which handles the UAE-side VAT, Corporate Tax, and invoicing considerations. This keeps the cross-border classification question — which determines whether the refund basis is even valid — assessed by one team with visibility into both sides of the transaction.

A low-cost filing service typically prepares and submits the RFD-01 with whatever figures and documents the client supplies, and considers its job done at the ARN. It does not independently reconcile GSTR-1/GSTR-3B/GSTR-2B, does not verify shipping bill and EGM status with Customs, does not test the underlying export classification, does not pursue the 90% provisional sanction where eligible, does not track the two-year limitation across every invoice, and typically does not represent the claim through a deficiency memo, scrutiny query, or appeal — those are frequently priced as separate, uncertain add-ons, if offered at all. PNPC treats the filing as the midpoint of the engagement, not its conclusion — reconciliation happens before filing, and representation continues after it, until the cash is actually received.