GST on Exports: Zero-Rated Supply

Exports under GST are considered zero-rated supplies, meaning no GST is payable on such supplies. However, exporters can choose between two options: paying IGST and claiming a refund or using a Letter of Undertaking (LUT) to export without paying IGST. Exporters can claim a refund of the GST paid on inputs used in the export of goods or services.

What is Zero-Rated Supply under GST?

Zero-rated supply refers to the export of goods or services where no GST is payable. This includes supplies made to a Special Economic Zone (SEZ) or to a person outside India. The exporter can claim a refund of the input tax credit (ITC) of GST paid on inputs used in the export of goods or services.

LUT vs Paying IGST: Which Option to Choose?

Exporters can choose between two options: paying IGST and claiming a refund or using a Letter of Undertaking (LUT). The LUT option is beneficial for exporters who do not want to block their funds by paying IGST. However, to use the LUT option, exporters must meet certain conditions, such as having a good compliance record and not being liable to pay any tax, interest, or penalty.

Option	Description	Benefits
Paying IGST	Pay IGST on exports and claim a refund	Can claim refund of IGST paid, but funds may be blocked till refund is received
Using LUT	Export without paying IGST, using a Letter of Undertaking	No blocking of funds, but requires good compliance record and meeting certain conditions

Refund Process for Exporters

The refund process for exporters involves filing a refund application on the GST portal, along with supporting documents such as the export invoice, shipping bill, and proof of payment of tax on inputs. The refund application must be filed within the time limit specified, which is verify the current figure months from the date of export.

• File refund application on GST portal
• Attach supporting documents, such as export invoice, shipping bill, and proof of payment of tax on inputs
• Verify the refund application and track the status

The most important thing for exporters to remember is to maintain accurate records and comply with all GST regulations to avoid any issues with refunds or LUT.

Documentation Required for Exporters

Exporters must maintain accurate records and documentation, including the export invoice, shipping bill, and proof of payment of tax on inputs. The documentation required may vary depending on the type of export and the country of destination.

1. Export invoice
2. Shipping bill
3. Proof of payment of tax on inputs
4. Bill of lading or airway bill

Frequently Asked Questions

What is the time limit for filing a refund application?

The time limit for filing a refund application is verify the current figure months from the date of export.

Can I use the LUT option if I have a bad compliance record?

No, to use the LUT option, you must have a good compliance record and meet certain conditions.

What documents are required to support a refund application?

The documents required to support a refund application include the export invoice, shipping bill, and proof of payment of tax on inputs.

The bottom line

Exports under GST are zero-rated, and exporters can choose between paying IGST and claiming a refund or using a Letter of Undertaking (LUT). It is essential for exporters to maintain accurate records and comply with all GST regulations to avoid any issues with refunds or LUT.