How to Claim GST Returns on Exports: A Step-by-Step Guide

Exports play a crucial role in the growth of any country’s economy, and India is no exception. To encourage exports and provide relief to businesses, the Indian government allows exporters to claim refunds on the Goods and Services Tax (GST) they have paid. Whether you are exporting goods or services, you can apply for a GST refund and enjoy the benefits under the GST regime. This blog will walk you through the process of claiming GST returns on exports in a very simple and easy-to-understand way.

What is GST on Exports?

The GST law in India treats exports as “zero-rated supplies.” This means that while GST is applicable to most goods and services within the country, exported goods and services are taxed at 0%. Exporters are not required to pay GST on these goods or services. However, they can claim a refund for any GST they have paid on input goods or services used for producing their export products. This helps reduce the overall tax burden on exporters, making them more competitive in the global market.

Definition of Export as per GST Law

The Integrated Goods and Services Tax (IGST) Act defines export as the transportation of goods or services from India to a place outside India. Since exports are considered zero-rated, exporters are eligible for GST refunds, which can be claimed in a few different ways.

Two Options for Claiming GST Refund on Exports

As an exporter, you can claim a GST refund using one of two methods:

1. Exporting without payment of IGST – Here, you can claim a refund on the unutilized input tax credit.
2. Exporting with payment of IGST – Here, you can claim a refund on the GST paid on your exports.

Let’s break down both methods step by step.

Option 1: Exporting Without Payment of IGST (Unutilized Input Tax Credit)

In this method, you do not pay IGST while exporting goods or services. Instead, you can claim a refund for the input tax credit (ITC) that was not utilized. This includes the GST paid on the goods or services you used to produce the export goods or services.

Here’s how to claim a refund:

1. File GSTR-1 and GSTR-3B

   • GSTR-1 contains details of all the outward supplies (sales) made during a particular month. It includes information on your exports.
   • GSTR-3B is a summary return that helps determine the tax liability for the month, including input tax credit and outward tax liability.
   • GSTR-1 contains details of all the outward supplies (sales) made during a particular month. It includes information on your exports.
   • GSTR-3B is a summary return that helps determine the tax liability for the month, including input tax credit and outward tax liability.
2. Submit the Export General Manifest (EGM)
   After filing the GSTR-1 and GSTR-3B, the exporter must also submit the Export General Manifest (EGM) for the goods that have been exported. This manifest confirms that the goods have left India.
3. Deemed Application
   Once the shipping bill is filed, it is automatically considered as the application for a GST refund. The customs department uses the shipping bill to process the refund application. There is no need for a separate refund application in this case.
4. Refund Processing
   The refund process is quite efficient, and refunds are usually granted within 15 days of filing the shipping bill and export manifest.

Option 2: Exporting with Payment of IGST (GST Paid on Exports)

In this method, you pay IGST on the goods or services being exported, and you can claim a refund for the IGST paid.

Here’s how to claim a refund:

1. File GSTR-1 and GSTR-3B
   Just like in the first method, you need to file GSTR-1 and GSTR-3B forms, mentioning the details of your exports.
2. File Form RFD-01A
   In this case, you need to submit an additional application form known as RFD-01A. This form is submitted online via the GST portal. Once submitted online, a hard copy of the form, along with supporting documents, must be provided to the GST office manually.
3. Supporting Documents
   Submit the necessary documents that support your export transactions. This includes shipping bills, tax invoices, and proof of IGST paid on the export goods or services.
4. Refund Timeline
   Once the application is complete, the refund is usually processed within 60 days. If the refund is delayed, interest at 6% per annum must be paid to the exporter.

Key Documents Required for GST Refund

To claim GST refunds, the exporter must ensure that they have all the necessary documents in place. Below is a list of key documents that are required for a GST refund:

For Exporting Goods

• Import Export Code (IEC) – This is mandatory for all exporters.
• Letter of Undertaking (LUT) or Bond – If exporting without IGST payment, an LUT or bond must be furnished.
• Purchase Orders – Relevant purchase orders for the export transaction must be available.
• Tax Invoice – The invoice should contain all the required details, including:
  • The exporter’s name, GSTIN, and address.
  • The recipient’s name, address, and destination country.
  • Invoice number, date, and HSN code of goods.
  • Value of goods with a breakdown of unit costs.
• Shipping Bill – A shipping bill should be filed with customs, and the details should match the tax invoice.
• Export General Manifest (EGM) – This is needed to confirm that goods have been exported.

For Exporting Services

• Letter of Undertaking (LUT) or Bond – Required if exporting without IGST payment.
• Service Agreement – A copy of the service agreement relevant to the export transaction.
• Tax Invoice – This should include:
  • Exporter’s name, GSTIN, and address.
  • Invoice number and date.
  • Recipient’s name and address.
  • Description and value of services.
  • HSN code of services.
  • Proof of receipt of convertible foreign exchange (Bank Realisation Certificate or Foreign Inward Remittance Certificate).

Important Points to Remember

1. Shipping Bill Acts as Refund Application
   In the case of exporting without IGST payment, the shipping bill itself is considered the refund application. No separate application is required.
2. Interest on Delayed Refunds
   If the refund is not processed within 60 days, the government is required to pay interest at 6% to the exporter.
3. Proper Documentation is Key
   Ensure that all documents, especially the shipping bill, tax invoice, and export general manifest, are accurate and match one another. Any discrepancies could delay the refund process.
4. Use the Online GST Portal
   Both refund applications and status tracking can be done online via the GST portal. The process is simplified, but timely filing of returns and forms like GSTR-1, GSTR-3B, and RFD-01A is essential.

Conclusion

Exporters can benefit greatly from the GST refund system, helping reduce their tax burden and keeping their businesses competitive in the global market. By following the steps outlined in this blog, you can ensure that you claim your GST refunds on time and without any hassle. Proper documentation, timely filings, and knowing which method (with or without IGST payment) works best for you will make the process smooth and efficient.

Understanding the requirements and ensuring all the necessary documents are in place will allow you to focus on your business while the refund process takes care of itself!

Also Read: What is the HSN Code in GST? A Complete Guide For Your Business