🔹 Introduction

Exports and imports are critical for Indian businesses, and GST provides a zero-rated framework for exports while taxing imports through IGST. To claim benefits and avoid penalties, exporters and importers must comply with specific rules, refund procedures, and documentation.

This guide provides a detailed compliance roadmap for GST on exports & imports in 2025.

(References: Sec. 16 of IGST Act, Sec. 54 of CGST Act, Rule 89–96A of CGST Rules, CBIC Circulars & Notifications till 2025)

🔹 GST on Exports (Zero-Rated Supplies)

Exports of goods or services are treated as zero-rated under Sec. 16 of IGST Act. Exporters can claim ITC/refund in two ways:

✅ Option 1: Export with Payment of IGST

• Exporter pays IGST on shipping bill.

• Later claims refund of IGST paid.

• Refund auto-processed through ICEGATE once shipping bill & EGM filed.

✅ Option 2: Export without Payment of IGST (LUT/Bond)

• Exporter furnishes Letter of Undertaking (LUT) in Form RFD-11.

• Supplies made without charging IGST.

• ITC accumulated → Refund claim via RFD-01.

• Bond required if LUT conditions not met.

⚠️ Note: LUT must be filed annually on GST portal before exports.

🔹 Documentation for Exports

• Export Invoice (with “Supply meant for export under LUT/Bond” if without IGST).

• Shipping Bill filed with Customs.

• Export General Manifest (EGM) filed by carrier.

• BRC/FIRC for service exports.

🔹 Refunds on Export of Goods & Services

• IGST route: Refund processed automatically via Customs (no separate RFD-01 required).

• LUT route: File RFD-01 with statement 3A (export invoices), shipping bills, BRC/FIRC.

• Refunds must be claimed within 2 years from relevant date (Sec. 54).

🔹 GST on Imports

Imports are treated as inter-state supplies under Sec. 7(2) of IGST Act.

✅ Import of Goods

• IGST levied along with Basic Customs Duty (BCD).

• IGST credit available as ITC (subject to conditions).

• Paid via Bill of Entry on ICEGATE.

✅ Import of Services

• Importer liable to pay GST under Reverse Charge Mechanism (RCM).

• Paid via GSTR-3B.

• ITC available if used for business purposes.

🔹 Practical Examples

Example 1: Export with IGST
A textile exporter in Noida exports goods worth ₹10 lakh, charges IGST @12%. Refund auto-credited via Customs after EGM filing.

Example 2: Export under LUT
An IT service provider in Delhi exports services worth ₹50 lakh under LUT. No GST charged. Refund of ITC on input services claimed via RFD-01.

Example 3: Import of Goods
A trader in Ghaziabad imports machinery worth ₹20 lakh. Pays BCD + IGST. IGST claimed as ITC in GSTR-3B.

Example 4: Import of Services
A company hires foreign consultant for $5,000. Pays GST under RCM in GSTR-3B. Same amount claimed as ITC.

🔹 Common Mistakes to Avoid

• Filing exports without LUT → refund blocked.

• Wrong HSN/SAC in export invoices.

• Delay in filing shipping bill/EGM → refund not processed.

• Not claiming ITC on imports within time limit.

• Ignoring RCM liability on foreign services.

🔹 Penalties & Legal Provisions

• Wrong ITC/refund claim → Penalty under Sec. 74A (from FY 2024-25).

• Non-payment of IGST on imports → Customs demand + interest.

• Non-compliance with LUT/Bond → Export treated as normal taxable supply.

🔹 FAQs

Q1. Is LUT mandatory for export without IGST?
➡️ Yes, must be filed annually.

Q2. Can ITC on capital goods be refunded in exports?
➡️ Yes, if exports are zero-rated.

Q3. How is refund claimed for export of services?
➡️ Via RFD-01 with BRC/FIRC proof.

Q4. Is IGST on imports refundable?
➡️ Yes, available as ITC (if eligible).

Q5. Can SEZ supplies claim zero-rated status?
➡️ Yes, supplies to SEZ are also zero-rated.

🔹 Best Practices

• ✅ File LUT before exporting.

• ✅ Ensure shipping bill & EGM filed correctly.

• ✅ Reconcile ICEGATE data with GST returns.

• ✅ Claim refunds within 2 years.

• ✅ Track RCM liabilities on foreign services.

🔹 Conclusion

Exports are zero-rated, and imports attract IGST, ensuring tax neutrality. However, compliance with LUT/Bond, refund procedures, and Customs documentation is essential. Mistakes often lead to refund delays or notices. Businesses must regularly reconcile GST returns with ICEGATE and bank records.

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