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GST worked examples: imports, exports and SEZ supplies

Worked examples on imports, exports of goods and services, SEZ supplies, merchant exporters, import of services, high-seas sales and deemed exports.

Published 4 October 2026

Imports are taxed as inter-State supplies; exports and supplies to Special Economic Zones are zero-rated, so that no Indian tax stays in their price. These worked examples cover the main routes. Figures are illustrations; customs duty rates are assumed where stated; GST rates are those in force on 04.10.2026.

C.1 — Import of a motor car

Facts. A Mumbai company imports a large motor car. Assessable value Rs. 50,00,000; basic customs duty assumed at Rs. 35,00,000 for illustration; social welfare surcharge 10% of that duty.

  1. Imports are inter-State supplies (section 7(2) IGST Act); IGST is levied at the border with customs duty (section 5(1), proviso).
  2. Value for IGST: assessable value + basic customs duty + surcharge = Rs. 50,00,000 + Rs. 35,00,000 + Rs. 3,50,000 = Rs. 88,50,000.
  3. Large motor cars are taxed at 40% from 22.09.2025: IGST Rs. 35,40,000. No compensation cess applies after 22.09.2025.
  4. Credit of IGST on motor vehicles for carrying persons with up to thirteen seats is generally blocked (section 17(5)(a)), unless the car is used for further supply, passenger transport, or driver training.

Result. IGST Rs. 35,40,000, normally a cost. Before 22.09.2025 such cars bore 28% plus compensation cess.

C.2 — Export of services under a letter of undertaking

Facts. A Bengaluru software company provides services worth Rs. 1 crore to a client in the United States and is paid in foreign exchange.

  1. All five conditions of export of services are met: supplier in India, recipient outside India, place of supply outside India, payment in convertible foreign exchange (or rupees where RBI permits), and the parties are not establishments of one person (section 2(6) IGST Act).
  2. Export is a zero-rated supply (section 16(1)). Under a letter of undertaking (Form RFD-11, Rule 96A) the invoice carries no IGST.
  3. Credit on inputs and input services accumulates and is refunded by the formula in Rule 89(4): zero-rated turnover × net credit ÷ adjusted total turnover.
  4. The refund application (RFD-01) must be filed within two years of the relevant date; 90% is paid provisionally within seven days of acknowledgement, and the final order is due within sixty days (section 54).

Result. No tax on the export; input credit refunded in cash.

C.3 — Export of goods: the two routes

Facts. A manufacturer exports goods worth Rs. 50,00,000.

  1. Route 1 — under bond or letter of undertaking without IGST, with refund of accumulated credit (as in C.2).
  2. Route 2 — on payment of IGST, with refund of that IGST. The shipping bill is treated as the refund application, and the refund is processed through the customs system (Rule 96).
  3. From 01.10.2023, the IGST-payment route is open only to the classes of persons, goods or services notified under section 16(4) IGST Act; check the current notification before choosing it.
  4. From 01.11.2024 no refund of either kind is available on goods subject to export duty (section 54(15)).

Result. Either route leaves the export free of tax; the details reported in GSTR-1 must match the shipping bill.

C.4 — Supply to a SEZ unit

Facts. A Bengaluru supplier supplies components worth Rs. 10,00,000 to a unit in a Special Economic Zone in Andhra Pradesh, for the unit's authorised operations.

  1. A supply to a SEZ developer or unit is inter-State (section 7(5)(b)) and, from 01.10.2023, zero-rated only if it is for authorised operations (section 16(1)(b)).
  2. The supplier may supply under a letter of undertaking without IGST, or (if eligible under section 16(4)) on payment of IGST, and claim refund; the relevant date is the due date of the return for the period (section 54, Explanation (2)(ba)).
  3. Endorsement by the SEZ officer that the goods were received for authorised operations supports the refund.

Result. Zero-rated, if for authorised operations; otherwise an ordinary inter-State supply.

C.5 — Supply to a merchant exporter at 0.1%

Facts. A manufacturer supplies goods worth Rs. 1 crore to a merchant exporter, who exports them within ninety days.

  1. Supplies to a registered merchant exporter for export are taxed at a concessional 0.1% (Notification 40/2017-Central Tax (Rate) for intra-State supplies; Notification 41/2017-Integrated Tax (Rate) for inter-State supplies), subject to conditions: export within ninety days of the invoice, the exporter's purchase order, and movement to the port or a registered warehouse.
  2. Tax: Rs. 10,000 instead of tax at the full rate.
  3. The supplier may claim refund of credit accumulated because of the concessional rate (inverted duty); the exporter exports under a letter of undertaking.

Result. Little tax is blocked in the export chain.

C.6 — Import of services from a foreign consultant

Facts. A registered Mumbai company engages a US consultant for Rs. 20,00,000, paid in dollars.

  1. Where the supplier or recipient is outside India, place of supply is decided under section 13 IGST Act; the general rule places it at the recipient's location — India.
  2. Import of services is inter-State (section 7(4)), and tax is payable by the Indian recipient under reverse charge (section 5(3); Notification 10/2017-Integrated Tax (Rate)).
  3. IGST 18% = Rs. 3,60,000, paid in cash; the recipient issues a self-invoice (section 31(3)(f)) and takes credit.

Result. Revenue-neutral for a business entitled to full credit, but the tax must be paid in cash first.

C.7 — High-seas sale

Facts. Importer A sells goods on the high seas to B before they reach India; B files the bill of entry.

  1. Supply of goods to any person before their clearance for home consumption is neither a supply of goods nor of services (Schedule III, para 8(b), from 01.02.2019).
  2. B pays IGST at clearance on the customs value, which includes the high-seas sale price.
  3. B takes credit of the IGST paid on import.

Result. One levy, at the border, on the full value.

C.8 — Deemed export against an advance authorisation

Facts. A manufacturer supplies inputs worth Rs. 50,00,000 to a holder of an advance authorisation, who uses them in goods for export.

  1. The goods do not leave India, so this is not an export; it is a deemed export notified under section 147 (Notification 48/2017-Central Tax).
  2. Tax is charged at the normal rate.
  3. Either the recipient or the supplier may claim refund of the tax paid (Rule 89), with the relevant date being the date of the return relating to the deemed export.

Result. Taxed, then refunded — unlike a true export, which is zero-rated at the outset.

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