GST Compliances on Export of Goods and Services – A Detailed Guide
Exports are treated as zero-rated supplies under GST, meaning the government intends exports to be tax-free while allowing credit of taxes paid on inputs. However, zero-rated does not mean zero compliance. Exporters must follow specific GST procedures to avoid denial of refunds and future litigation.
Legal Framework
- Section 16 of IGST Act, 2017 – Zero-rated supplies
- Section 2(5) of IGST Act – Export of goods
- Section 2(6) of IGST Act – Export of services
- Relevant GST Rules, Circulars, and Notifications
What Qualifies as Export under GST?
✅ Export of Goods
Goods are treated as exported when:
- Goods are taken out of India
- Supplier is located in India
No condition regarding receipt of foreign currency for goods under GST (though FEMA applies).
Export of Services (ALL conditions must be satisfied)
- Supplier of service is located in India
- Recipient of service is located outside India
- Place of supply is outside India
- Payment received in convertible foreign exchange (or as permitted by RBI)
- Supplier and recipient are not merely establishments of the same person
⚠️ Failure of even one condition → supply becomes taxable in India.
GST Registration for Exporters
- GST registration is mandatory for exporters (even if turnover < threshold)
- Special provision for:
- Merchant exporters
- Service exporters
- GSTIN required for LUT and refunds
LUT / Bond Requirement
What is LUT?
Letter of Undertaking allows exporters to supply goods/services without payment of IGST.
Who can file LUT?
- All registered exporters (no turnover limit)
- Filed financial year–wise
Validity
- Valid for one financial year
- Must be filed before making zero-rated supplies
⚠️ Without LUT → IGST must be paid and refund claimed later.
Two Options for Export under GST
Option 1: Export under LUT (Without IGST)
- No tax charged on export invoice
- Claim refund of unutilized ITC
- Preferred option for most exporters
Option 2: Export with IGST Payment
- IGST charged and paid
- Refund of IGST claimed
- Mostly used when LUT is not available
Invoicing Requirements for Exports
Export invoice must contain:
- GSTIN of exporter
- Invoice number & date
- Recipient details
- Description of goods/services
- Value (in INR or foreign currency)
- Mandatory endorsement:
- “Supply meant for export under LUT without payment of IGST”
OR - “Supply meant for export on payment of IGST”
- “Supply meant for export under LUT without payment of IGST”
Return Filing Compliances
GSTR-1
- Export details reported in:
- Table 6A (Exports)
- Shipping bill details mandatory for goods
- For services: Invoice-wise reporting
GSTR-3B
- Export turnover shown as zero-rated supply
- No tax payable if under LUT
GST Refund Compliances
Refund Types
- Refund of unutilized ITC (LUT route)
- Refund of IGST paid (IGST route)
Key Documents
- Shipping bills
- Export invoices
- FIRC / BRC (mandatory for services)
- LUT acknowledgement
Time Limit
- Refund application to be filed within 2 years from relevant date
⚠️ Incorrect reporting in GSTR-1 / 3B is the most common reason for refund rejection.
FEMA & GST Linkage (Especially for Services)
- Export proceeds must be received within prescribed FEMA timelines
- FIRC / BRC is critical for:
- Export of services
- GST refund claims
- GST department increasingly cross-verifies FEMA compliance
Common Mistakes to Avoid
❌ Not filing LUT on time
❌ Wrong place of supply for services
❌ Export invoices not reported correctly in GSTR-1
❌ Claiming refund without FIRC/BRC
❌ Treating intermediary services as export
❌ Mismatch between shipping bill and GST data
Key Takeaway
Export under GST is beneficial but documentation-driven.
Zero-rated supplies invite high scrutiny, and minor procedural lapses can lead to refund blockage or notices.
A strong compliance + documentation discipline is essential for smooth exports under GST.
