Published 12 October 2026
An exporter that pays no IGST on its exports has no output tax to absorb its credit, so the credit has to come back as a refund. Getting it back depends on choices and documents that come well before the refund application. The letter of undertaking has to be in place before the first export of the year. The value on the shipping bill and the value on the invoice both count, and the lower one is used. A ceiling of one and a half times the domestic price of the same goods can cut the refund. Every export invoice in the claim has to match GSTR-1 and the customs data, line by line.
This guide covers the LUT in FORM GST RFD-11, the formula in rule 89(4), the statements and export evidence, and the IGST-paid route in contrast. The general procedure for a refund (RFD-01, the time limit, processing, rejection and re-credit) is in Refund of Unutilised Credit: Who Can Claim and How.
Two routes, and which one is open
Section 16(3) of the IGST Act, in force in its present form from 1 October 2023, allows a person making a zero-rated supply to supply “without payment of integrated tax, under bond or Letter of Undertaking” and to claim “refund of unutilised input tax credit”. Zero-rated supplies are exports and supplies to an SEZ unit or developer “for authorised operations”.
Section 16(4) allows the other route, payment of IGST and refund of that IGST, only for persons or goods and services notified by the Government. Notification No. 01/2023-Integrated Tax, as amended by No. 05/2023-Integrated Tax with effect from 1 October 2023, notifies:
- all goods and services for export on payment of IGST, except pan masala, specified tobacco products and specified mint oils
- all suppliers to SEZ units and developers, for authorised operations, with the same exceptions
So for most exporters both routes remain open. For those goods, only the LUT route is.
The IGST-paid route, in brief. Under rule 96, the shipping bill for goods “shall be deemed to be an application for refund of integrated tax paid”. It is treated as filed once the export manifest is filed and a valid GSTR-3B is furnished. The applicant must also have completed Aadhaar authentication. The customs system processes it against table 6A of GSTR-1, with no RFD-01 for goods. Exports of services with IGST are claimed in RFD-01 (rule 96(9)). Rule 96(10), which barred the IGST route for exporters who had used certain concessional input schemes, was omitted on 8 October 2024 by Notification No. 20/2024-Central Tax. The rest of this guide concerns the LUT route.
The LUT: FORM GST RFD-11
Rule 96A(1) requires a person exporting without IGST to furnish, “prior to export, a bond or a Letter of Undertaking in FORM GST RFD-11”. The person binds itself to pay the tax with interest under section 50 if the export is not completed in time. Rule 96A(6) applies the same requirement to supplies to SEZ units and developers.
Notification No. 37/2017-Central Tax sets the conditions:
- Who may use a LUT. All registered persons, “except those who have been prosecuted” for an offence under the GST Acts or the earlier laws involving tax evaded above Rs 250 lakh. Those persons furnish a bond, with a bank guarantee of 15 per cent of the bond amount (Circular No. 8/8/2017-GST).
- For how long. A LUT is furnished “for a financial year”. Circular No. 8/8/2017-GST states that it “shall be valid for the whole financial year in which it is tendered”.
- Who executes it. The working partner, the managing director, the company secretary or the proprietor, or a person duly authorised by them or by the board.
The same circular says that the self-declaration of non-prosecution “shall be accepted unless there is specific information otherwise”. It also says that a LUT not accepted within three working days “shall deemed to be accepted”.
Portal steps. The portal’s user manual and FAQs describe filing as follows:
- Go to Services > User Services > Furnish Letter of Undertaking (LUT).
- Select the financial year.
- Where a LUT for the current year was earlier furnished manually and accepted, upload it. Only one file, up to 2 MB, is allowed.
- Enter the name, address and occupation of two independent witnesses, and tick the self-declarations.
- Preview, then sign and file with DSC or EVC. The primary or another authorised signatory signs.
The portal generates an ARN and an acknowledgement. Its FAQs list “Deemed Approved” as the status where the officer takes no action within three working days.
If the export is not completed. Under rule 96A(1), tax with interest is payable within fifteen days after:
- for goods, three months from the export invoice, “or such further period as may be allowed by the Commissioner”
- for services, one year from the invoice, or the period allowed under FEMA including any RBI extension, whichever is later, if payment is not received
Where the tax is not paid, “the export as allowed under bond or Letter of Undertaking shall be withdrawn forthwith”. Under rule 96A(3) and (4), it is restored when the amount is paid.
Circular No. 125/44/2019-GST paras 44 and 45 ask officers not to deny zero-rating where exports are proved. A LUT filed late may be accepted “on ex post facto basis”, and the time for export extended after the event.
Circular No. 197/09/2023-GST para 4 covers the case where IGST was paid under rule 96A because of delay, and the goods were exported or payment received afterwards. The exporter may then claim both the refund of unutilised credit and a refund of the IGST so paid, but “no refund of the interest”.
The formula in rule 89(4)
Rule 89(4) fixes the maximum refund:
Refund Amount = (Turnover of zero-rated supply of goods + Turnover of zero-rated supply of services) x Net ITC ÷ Adjusted Total Turnover
The terms are defined in the rule:
- Net ITC is credit “availed on inputs and input services during the relevant period”. Credit on capital goods is outside it. The portal’s FAQs also exclude transitional credit, as does Circular No. 125/44/2019-GST para 50. Credit is “availed” in the period in which it enters the ledger through GSTR-3B (para 61). Credit reversed and booked as a cost is not part of it (para 43©).
- Turnover of zero-rated supply of goods is the value of goods supplied without tax in the period, “or the value which is 1.5 times the value of like goods domestically supplied by the same or, similarly placed, supplier, as declared by the supplier, whichever is less”. This ceiling was inserted by Notification No. 16/2020-Central Tax with effect from 23 March 2020.
- The value of exported goods is, from 5 July 2022 (Notification No. 14/2022-Central Tax), the FOB value in the shipping bill or bill of export, or the value in the tax invoice, “whichever is less”.
- Turnover of zero-rated supply of services is counted on payments, not invoices. It is the payments received in the period for zero-rated services, plus services completed in the period for which payment came in advance earlier, less advances received for services not completed in the period.
- Adjusted Total Turnover is the State turnover under section 2(112), excluding services, plus zero-rated and other services. Since 8 October 2024 (Notification No. 20/2024-Central Tax), it excludes “the value of exempt supplies other than zero-rated supplies”.
- Relevant period is the period of the claim.
The ceiling applies on both sides of the fraction. Circular No. 147/03/2021-GST para 4 holds that the capped value of exported goods is also the value used in Adjusted Total Turnover. Circular No. 197/09/2023-GST para 3 applies the same reasoning to the lower of FOB and invoice value.
The illustration in Circular No. 147 has these figures:
- A supplier sells 5 units at home for Rs 200 each, and exports 5 units at Rs 350 each.
- Net ITC is Rs 270.
- The capped export turnover is 1.5 x 5 x 200 = Rs 1,500, not Rs 1,750.
- Adjusted Total Turnover is 1,000 + 1,500 = Rs 2,500.
- The refund is 1,500 x 270 ÷ 2,500 = Rs 162.
A second example, without the ceiling. In a month, a manufacturer exports goods under LUT. The FOB value is Rs 60,00,000, below both the invoice value and 1.5 times its domestic price. Its domestic taxable sales are Rs 40,00,000, and it has no exempt supplies. Credit on inputs and input services is Rs 9,00,000. Capital goods credit of Rs 2,00,000 is left out. The maximum refund is 60,00,000 x 9,00,000 ÷ 1,00,00,000 = Rs 5,40,000.
The portal then allows the lowest of this figure, the credit ledger balance at the end of the period, and the balance on the date of filing. It debits the ledger by that amount (Circular No. 125/44/2019-GST para 37).
What to have ready
| Item | Where it comes from |
|---|---|
| LUT acknowledgement (ARN) for the financial year | Portal |
| Export invoices, and table 6A or 6B of GSTR-1 (as amended in GSTR-1A) | Books and returns |
| Shipping bill or bill of export numbers and dates, port codes, EGM details | ICEGATE |
| FOB values, for comparison with invoice values | Shipping bills |
| Domestic selling price of like goods, for the 1.5 times test | Books, sales register |
| BRC or FIRC for each export of services | Authorised dealer bank |
| SEZ officer’s endorsement, and proof of payment for services to an SEZ | SEZ unit or developer |
| Net ITC split into inputs, input services and capital goods | Books and GSTR-3B table 4 |
| Statement of inward invoices with HSN or SAC, matched to GSTR-2B | Books and portal |
The statements in RFD-01
- Exports. The ground is “Exports of goods/services – without payment of tax (accumulated ITC)”. Statement 3 lists each export invoice with its shipping bill, port code and EGM, or its BRC or FIRC for services. These are the evidence required by rule 89(2)(b) and ©. Statement 3A sets out the rule 89(4) calculation.
- SEZ supplies. The ground is supplies to an SEZ unit or developer without payment of tax. Statement 5 lists invoices with the SEZ officer’s endorsement (rule 89(2)(d) and (e)), and Statement 5A the calculation. The supplier also declares under rule 89(2)(f) that tax was not collected from the SEZ unit or developer.
For goods supplied to an SEZ, the application is filed only “after such goods have been admitted in full in the Special Economic Zone for authorised operations, as endorsed by the specified officer”. For services, it is filed with evidence of receipt for authorised operations, endorsed by that officer (rule 89(1), first proviso).
The portal’s FAQs add three points:
- Statement 3 is prepared in the offline utility and validated against GSTR-1. Invoice details in it “must be same” as in table 6A.
- Invoices rejected by ICEGATE can be seen under Services > Refunds. They are corrected by amending the invoice in a later GSTR-1 and then claimed again.
- More than one invoice can be shown against a single BRC or FIRC.
Realisation of proceeds. For services, receipt of payment is part of the definition of export and BRC or FIRC is required at filing. For goods, Circular No. 125/44/2019-GST para 48 says that proof of realisation “should not be insisted upon” when processing the refund. But the proviso to section 16(3) of the IGST Act and rule 96B require the refund to be repaid with interest within thirty days after the FEMA period, to the extent proceeds are not realised. Nothing is recovered where the RBI writes off the realisation requirement on merits. Where proceeds are realised later, within any period extended by the RBI, the amount recovered is refunded if evidence is produced within three months of realisation (rule 96B(2)).
Time limits
| Event | Limit | Source |
|---|---|---|
| LUT | Before the first export of the financial year | Rule 96A(1); Notification No. 37/2017-Central Tax |
| Export of goods supplied under LUT | Three months from invoice, or extended period | Rule 96A(1)(a) |
| Receipt of payment for services | One year from invoice, or FEMA period if later | Rule 96A(1)(b) |
| Refund application, goods | Two years from the date the ship or aircraft leaves India, or the goods cross the land frontier | Section 54(1), Explanation 2(a) |
| Refund application, services | Two years from receipt of payment, or from the invoice where payment came in advance | Explanation 2© |
| Refund application, SEZ supplies | Two years from the due date of the return for the period | Explanation 2(ba) |
| Repayment on non-realisation | Thirty days after the FEMA period | Rule 96B |
Signing, consequences, and what can be put right
Signing. RFD-11 is signed by the person named in Notification No. 37/2017-Central Tax and filed with DSC or EVC. RFD-01 is filed by the authorised signatory with DSC or EVC.
Consequences. Where exports are not completed in time, IGST with interest is due and the LUT facility is withdrawn until it is paid. A refund later found excessive is recovered under section 73, 74 or 74A with interest. A provisional refund found excessive is recovered through RFD-08. Unrealised proceeds trigger rule 96B.
What can be put right.
- A LUT filed late can be accepted ex post facto (Circular No. 125/44/2019-GST para 44).
- Shipping bill or invoice errors that block validation are corrected by amending the export invoice in GSTR-1 or GSTR-1A (Correcting Mistakes in Returns), and the claim is filed again.
- A deficiency memo is answered by a fresh RFD-01, with the time in between excluded from the two years.
- Delay caused by portal failures may be excused. This was the case in Sethi Sons (Delhi High Court, 2023), an LUT exporter’s claim, discussed in the overview.
The procedure in order
- File RFD-11 for the financial year before the first export, with DSC or EVC.
- Issue export invoices under LUT and report them in table 6A or 6B of GSTR-1, with shipping bill details.
- Complete exports within three months, or receive payment for services within the allowed period. Otherwise pay IGST with interest.
- For the refund period, compute export turnover at the lower of FOB and invoice value, and capped at 1.5 times the domestic value of like goods. Use the same value in Adjusted Total Turnover.
- Compute Net ITC on inputs and input services only, and apply the formula. The portal then applies the ledger limits.
- File RFD-01 with Statement 3 and 3A (or 5 and 5A for SEZ supplies), validated against GSTR-1, and follow it through RFD-02, RFD-04 and RFD-06.
- Track realisation of export proceeds, and repay under rule 96B where they are not realised.
The next guide covers the other case in section 54(3): credit accumulated because inputs are taxed at a higher rate than outputs.