In this guide
A Letter of Undertaking (LUT) allows eligible registered taxpayers to export without paying IGST upfront. GST paid on eligible business purchases may accumulate as unutilised input tax credit (ITC).
Exporters can claim a refund of eligible accumulated ITC through Form GST RFD-01, subject to Section 54 of the CGST Act, Rule 89 and the applicable export conditions.
An LUT does not guarantee a refund. You must file a separate application, reconcile the figures and support the claim.
Who Can Claim This Refund?
This route generally applies to registered exporters making qualifying zero-rated exports of goods or services without payment of IGST under an LUT or bond.
Before claiming, verify that:
- The supplies legally qualify as exports;
- The LUT or bond covers the relevant supplies;
- ITC was validly availed and remains eligible;
- Required returns have been filed;
- The claim meets the applicable refund formula and restrictions.
An overseas customer or foreign-currency payment alone does not establish an export of services. Check the supplier’s location, recipient’s location, place of supply, payment conditions and the restriction concerning establishments of the same person.
This article covers exports without payment of tax. Exports with payment of IGST and supplies to SEZ units or developers have separate refund categories.
What Amount Can Be Refunded?
The refund is not necessarily the entire electronic credit ledger balance.
Under Rule 89(4), the broad calculation is:
Maximum refund = Eligible zero-rated turnover × Net ITC ÷ Adjusted total turnover
Each term has a prescribed definition. Net ITC generally covers eligible credit on inputs and input services availed during the relevant period, subject to exclusions. Capital-goods ITC is not included in this formula.
For example, if eligible zero-rated turnover is ₹20 lakh, adjusted total turnover is ₹25 lakh and Net ITC is ₹1 lakh, the formula produces ₹80,000.
The actual claim remains subject to applicable ledger-balance limits, valuation rules and other restrictions. Do not use total sales or total purchase GST without the required adjustments.
What Is the Refund Filing Deadline?
The ordinary limit is two years from the relevant date, rather than two years from LUT filing.
| Export situation | General relevant-date rule |
|---|---|
| Goods exported by sea or air | Date the ship or aircraft leaves India |
| Goods exported by land | Date the goods pass the frontier |
| Goods exported by post | Date of dispatch by the post office to a destination outside India |
| Services completed before payment | Date qualifying payment is received |
| Services paid for in advance | Invoice date |
Check the precise statutory provision, permitted payment currency and any applicable exclusions or extensions.
The GST Portal cautions that accepting an application does not establish compliance with the limitation period. Calculate the deadline independently and avoid filing at the last moment.
Separate LUT Conditions Also Apply
The conditions for exporting under LUT are different from the refund limitation period.
Rule 96A generally requires goods to be exported within three months of the invoice date and qualifying payment for services to be received within one year, subject to permitted extensions.
Failure can trigger tax and interest obligations. Review delayed exports or receipts separately rather than assuming the two-year refund window cures the delay.
Documents and Information to Prepare
Keep a reconciled working file containing:
- LUT acknowledgement and reference number;
- Export invoices, debit notes and credit notes;
- Shipping bills, port details and export-manifest information for goods;
- BRC/FIRC details and receipt reconciliation for services;
- Purchase invoices and eligible ITC workings;
- GSTR-1, GSTR-3B and GSTR-2B reconciliation;
- Statement 3 and the refund calculation in Statement 3A;
- Required declarations and undertakings;
- Bank-account details for refund payment.
Goods and services have different evidence requirements. BRC/FIRC details are ordinarily required for service-export claims; do not automatically apply the same filing requirement to goods. Export-proceeds realisation conditions can nevertheless affect goods refunds separately.
TaxClear’s GST reconciliation guide can help organise the supporting records.
How to File RFD-01
- Log in to the GST Portal.
- Go to Services → Refunds → Application for Refund.
- Select the export-without-payment-of-tax accumulated-ITC category.
- Choose the relevant period and create the application.
- Upload and validate the required invoice statements.
- Complete the refund calculation and check ledger limits.
- Enter LUT particulars, select the bank account and attach required documents.
- Review declarations and file using the permitted DSC or EVC.
- Save the ARN, application and credit-ledger debit details.
Complete applicable return filings, including GSTR-3B for the claim period. A saved application is not a filed claim.
Track the application and respond promptly to any deficiency memo or notice. An ARN confirms submission, not sanction.
Common Reasons Claims Need Correction
Watch for invoice mismatches, duplicate claims, ineligible ITC, incorrect turnover, missing service-export receipts and inconsistent shipping details.
Do not assume an expired historical relaxation applies to a current claim.
For eligibility review, reconciliation and filing assistance, contact TaxClear’s GST services team.
Frequently Asked Questions
Does Filing an LUT Automatically Claim a Refund?
No. Submit a separate RFD-01 application.
Can Capital-Goods ITC Be Included?
Not in Net ITC under the Rule 89(4) export-refund formula.
Does the Two-Year Period Start From the Financial-Year End?
Not automatically. Identify the applicable relevant date.
Can I Claim Every Rupee in My Credit Ledger?
No. The formula, ledger limits and eligibility restrictions apply.
Does an ARN Mean the Refund Is Approved?
No. The claim must still be examined and sanctioned.
