Exports are zero-rated under GST — either pay IGST and claim refund, or export under LUT without paying IGST. Imports attract IGST + customs duty. This guide covers export options, LUT process, import duty structure, and ITC on imports.
Pay IGST on exports → File shipping bill → Claim IGST refund through customs (auto-credited to bank account)
Timeline: Refund: 30-60 days after shipping bill filing
Obtain LUT (Letter of Undertaking) → Export without paying IGST → Claim refund of accumulated ITC
Timeline: LUT: Valid for entire FY. ITC refund: 30-60 days after RFD-01 filing
Supply to EOU/SEZ/specified projects → Treated as export for refund purposes → Either supplier or recipient can claim refund
Timeline: Refund: 60 days
Applied on CIF value (Cost + Insurance + Freight). Rate varies by HS code (0-150%). BCD is NOT an input tax credit-eligible duty under GST.
Levied under Section 3(7) of Customs Tariff Act. Applied on: Assessable Value + BCD + Social Welfare Surcharge. IGST paid on imports IS eligible for ITC (claimed in GSTR-3B).
10% of BCD (for most goods). Applied on BCD amount, not on assessable value. Not eligible for ITC.
Applied on specific goods (tobacco, coal, aerated drinks, luxury cars). Applied over and above BCD + IGST. Cess paid on imports: ITC available only against output cess liability.
Filed with customs for every import. IGST paid is auto-reflected in GSTR-2A/2B. Claim ITC in the month of filing Bill of Entry or within prescribed time limit.
Any registered person can file LUT (post-amendment). Earlier: restricted to exporters with clean track record. Now: only persons prosecuted for tax evasion > ₹250 lakh are ineligible. New exporters are eligible from first export.
Login to GST portal → Services → User Services → Furnish Letter of Undertaking. Fill in: FY, bank account details. No bond amount or bank guarantee required. Self-declaration is sufficient.
Valid for entire financial year. Must be renewed before April 1 each year. If not renewed: export with payment of IGST (option 1) automatically applies. One-time process per FY.
With LUT: issue tax invoice with 0% IGST. Mention on invoice: 'Supply meant for export under LUT without payment of IGST'. File GSTR-1 with export details (Table 6A). Ship goods with shipping bill.
File refund application (Form RFD-01) on GST portal. Select: Refund of ITC on account of export without payment of tax. Upload: shipping bills, BRC/FIRC (bank realization certificate). Refund formula: (Export turnover / Total turnover) × Net ITC.
Exports are 'zero-rated' under Section 16 of IGST Act. This means: (1) You can export with payment of IGST and claim refund (faster, simpler), or (2) Export under LUT without paying IGST and claim refund of accumulated ITC (better for cash flow). Either way, the effective GST on exports is ZERO. Both goods and services exports are zero-rated. SEZ supplies are treated as zero-rated exports.
Letter of Undertaking (LUT) is a self-declaration filed on GST portal that allows you to export without paying IGST. Benefits: no working capital blockage (you don't pay and then wait for refund), smoother cash flow for regular exporters. Who should use: exporters with regular exports, those with significant ITC balances, anyone wanting to avoid IGST payment upfront. It's free to file and valid for entire FY.
Yes. IGST paid on imports of goods is eligible for ITC under Section 16 of IGST Act read with Section 17 of CGST Act. The IGST amount appears in your GSTR-2A/2B based on the Bill of Entry filed with customs. Claim the ITC in GSTR-3B. Important: Basic Customs Duty (BCD) is NOT eligible for ITC. Only IGST and Compensation Cess (against output cess) are ITC-eligible on imports.
For exports with IGST payment: refund is processed through customs. Timeline: (1) Shipping bill filed and matched with GSTR-1 data (Table 6A), (2) IGST refund sanctioned by customs within 30-60 days, (3) Amount credited to exporter's bank account. Delays happen when: GSTR-1 data doesn't match shipping bill, shipping bill has errors, or Scroll/disbursement is pending at customs end. Regular follow-up with customs helps.
Software and IT service exports are zero-rated under GST if: (1) Supplier is in India, (2) Recipient is outside India, (3) Place of supply is outside India (determined by location of recipient), (4) Payment is received in convertible foreign exchange or Indian rupees (where permitted by RBI). File LUT and export without IGST. Claim ITC refund on input costs. GSTR-1 Table 6A: report as export of services. Maintain FIRC/BRC as proof of foreign exchange receipt.
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