GST Refund Process for Exporters in 2026: A Comprehensive Guide

For Indian exporters, timely GST refunds play a direct role in keeping cash flows stable. When refunds get delayed, working capital remains blocked, borrowing needs increase, and day-to-day operations feel the strain, especially for businesses operating on tight margins.

The GST framework recognises this by treating exports as zero-rated supplies. In simple terms, you do not charge GST on exports, but you can still claim a refund of the tax paid on inputs and services used to fulfil those exports. This ensures taxes do not become a cost in your international pricing.

Over time, the refund process has changed. In 2025, system-led checks and updated procedures aim to reduce mismatches and speed up processing. This guide explains the two refund routes available, exports with IGST payment and exports without IGST under a Letter of Undertaking (LUT) or Bond.

Why Do Exporters Need GST Refunds?

Exports fall under zero-rated supply in GST. In simple terms, you do not charge GST on export invoices, but you can still claim a refund of the GST paid on inputs and services used to fulfil those exports. This design ensures taxes do not become a cost for businesses selling outside India.

GST refunds matter because they directly support your ability to compete and scale. Here’s how:

• GST refunds ensure that Indian exports remain tax-free, so your pricing stays competitive in global markets.
• Timely refunds release blocked input tax credit (ITC), improving liquidity and reducing dependence on short-term borrowing.
• Faster refunds free up capital that you can reinvest in production, marketing, or technology upgrades.
• You can claim a GST refund either by paying IGST on exports and getting it back later, or by exporting without IGST and claiming a refund of your ITC using a LUT or Bond.

Related Read: GSTR-8: Return Filing, Format, Eligibility & Rules

What Are the Latest GST Refund Updates for Exporters in 2025?

In 2025, the GST refund framework has moved further towards automation and speed. The focus is clear: reduce manual checks, ease portal friction, and ensure exporters get money back faster.

Key updates you should know:

• Process-Level Reforms: Refunds are now processed mainly through automated checks, which reduces unnecessary queries and follow-ups.
• Faster refunds for Small Claims: Refund amounts below ₹1,000 are processed quicker to support freelancers and small exporters with frequent low-value invoices.
• 7-Days Refund Window for Select Sectors: Export-oriented industries such as textiles, chemicals, pharmaceuticals, and fertilisers benefit from faster turnaround timelines.
• 90% Provisional Refunds: Eligible exporters receive most of the refund upfront through automated, risk-based assessment, reducing cash blockages.
• GSTN Portal Flexibility: Refund filing is allowed even if some minor tax heads show negative balances, as long as the overall ledger balance is positive.
• Invoice-Based Filing Expanded: For certain refund types, the system no longer requires selecting a “from” and “to” tax period, improving accuracy.
• Returns Must Be Up To Date: You must file all pending GSTR-1 and GSTR-3B returns before applying, and uploaded invoices get locked.
• Specific Statements Are Mandatory: Categories like export of services with tax payment and deemed exports now require invoice uploads through defined statements such as Statement 2 and Statement 5B.

Summary of GST Refund Updates in 2025

Who Can Claim a GST Export Refund?

You can claim a GST export refund if you fall into any of the following categories and meet the basic compliance requirements:

• Exporters of goods, including manufacturers and e-commerce sellers shipping products outside India.
• Exporters of services, such as SaaS companies, freelancers, consultants, and agencies earning foreign currency.
• Suppliers making zero-rated supplies to SEZ units or SEZ developers, even when goods or services do not leave India physically.
• Taxpayers under an inverted duty structure, where GST paid on inputs is higher than GST charged on outward supplies.

To remain eligible, you must hold a valid GST registration and complete the export transaction in line with GST rules. This includes issuing proper invoices, filing returns on time, and ensuring export details correctly reflect in GST and customs systems. Meeting these basics helps avoid refund rejections and unnecessary delays.

What Are the Types of GST Export Refunds Available?

Under Section 16(3) of the IGST Act, you have two recognised routes to claim GST refunds on exports. These types of GST refunds are designed to suit different cash-flow needs and business models.

Export With Payment of IGST

Under this option, you export goods or services after paying IGST on the export invoice. Once customs validates your shipping bill and the export details match your GSTR-1 and GSTR-3B filings, the system processes the IGST refund on exports automatically through ICEGATE. For goods exports, you usually do not need to file Form RFD-01 separately, provided there are no mismatches. This route works well if you prefer faster refunds and have sufficient liquidity to pay IGST upfrontcommon among established goods exporters.

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Export Without Payment of IGST (Under LUT/Bond)

Here, you submit a LUT for exports or a Bond and export without paying IGST. Instead of claiming tax paid on exports, you apply for a refund of accumulated ITC. This export without payment of tax route suits SaaS exporters, freelancers, and service providers who mainly incur GST on inputs and services. You must file Form RFD-01 to claim the ITC refund on exports, making accuracy in returns and documentation critical.

Quick Comparison

What Key Documents Do Exporters Need for GST Refund Claims?

Documents For Export Of Goods

• Import Export Code (IEC) issued by DGFT.
• LUT or Bond if exporting without IGST.
• Purchase orders or sales contracts with overseas buyers.
• Tax invoice showing exporter and recipient details, GSTIN, HSN code, taxable value, and IGST (if applicable).
• .Shipping bill or bill of export, matching invoice details and linked to customs filing
• Export General Manifest (EGM) confirming goods have physically left India.
• Bank Realisation Certificate (BRC) as proof of foreign exchange receipt, where applicable.

Documents For Export Of Services

• LUT or Bond for exports without IGST
• Service agreement or contract with the foreign client
• Tax invoice for services with SAC code, value break-up, and recipient details
• BRC or FIRC as proof of receipt of convertible foreign exchange or RBI-permitted INR
• Filed GSTR-1 and GSTR-3B, ensuring export details are correctly reported

How to Apply For GST Refund: Export With Payment of IGST

What Is the Deemed Application Process for Goods?

When you export goods after paying IGST, the electronically filed shipping bill itself serves as the refund application. As long as the shipping bill includes IGST payment details and matches your GST returns, the system treats it as a valid refund request without any separate filing.

How to File GSTR-1 And GSTR-3B for Export Details?

File GSTR-1 by reporting export invoices with payment of tax in Table 6A, ensuring invoice details match shipping and bank records. In GSTR-3B, declare the same export turnover and IGST paid under outward supplies. Consistency across returns is critical to avoid refund delays.

Steps to Claim Refund For Export of Services With IGST Payment

1. Log in to the GST portal using your valid credentials.
2. Go to Services → Refunds → Application for Refund (RFD-01).
3. Select Export of Services With Payment of Tax as the refund category.
4. Download the offline utility for Statement 2.
5. Enter export invoice details and IGST payment information in the utility.
6. Upload the completed statement and validate the data on the portal.
7. Fill in the refund amount auto-populated by the system.
8. Review the application and submit it using Digital Signature Certificate (DSC) or Electronic Verification Code (EVC) to generate the Application Reference Number (ARN).

How to Apply for GST Refund: Export Without Payment of IGST (Under LUT/Bond)

Before you can claim an ITC refund, you must complete LUT filing in advance. The refund itself is then claimed online through RFD-01, subject to limits prescribed under Rule 89(4) of the CGST Rules.

Steps to File Letter Of Undertaking (LUT) in Form RFD-11

1. Log in to the GST portal and go to Services → User Services → Furnish LUT.
2. Select the relevant financial year and upload the previous LUT, if available.
3. Fill Form GST RFD-11 with exporter details and required declarations.
4. Enter witness details and authorised signatory information.
5. Submit the form using DSC or EVC and download the acknowledgement for records.

Steps to File Refund Application (Form RFD-01) for Accumulated ITC

1. Log in to the GST portal and navigate to Services → Refunds → Application for Refund.
2. Select Refund of ITC on Export of Goods & Services without Payment of Tax (accumulated ITC).
3. Proceed with invoice-based filing, as tax period selection has been removed for certain categories in 2025.
4. Upload the relevant statement with invoice details (for example, Statement 3 for goods).
5. Verify the refund amount shown by the system and select the bank account.
6. Attach supporting documents such as export invoices and BRC or FIRC for services.
7. Review and submit the application using DSC or EVC to generate the ARN.

How to Calculate Refund Amount Using Rule 89(4)

Refund Amount = (Turnover of zero-rated supply of goods + Turnover of zero-rated supply of services) × Net ITC ÷ Adjusted Total Turnover.

• Net ITC: Input tax credit availed on inputs and input services during the relevant period.
• Turnover of zero-rated supply: Value of exports made without IGST. For goods, this is capped by the 1.5× rule (actual export value or 1.5 times the value of similar domestic supplies, whichever is lower).
• Adjusted Total Turnover: Total taxable turnover excluding exempt supplies for the period.
• Relevant Period: The period for which the refund claim is filed.

This formula sets the maximum admissible refund, not the final amount you may receive.

What Are Specific Considerations for Export of Services?

Exporting services under GST looks simple on paper, but it comes with its own complications. Unlike goods, there is no shipping bill trail. Your refund claim depends heavily on contracts, invoices, and foreign exchange proof lining up correctly.

Key points you should keep in mind:

• Definition Matters: An export of services must meet all five conditions under Section 2(6) of the IGST Act

1. Supplier located in India.
2. Recipient outside India.
3. Place of supply outside India. 
4. Payment received in convertible foreign exchange or INR where permitted by RBI.
5. Supplier and recipient not merely establishments of the same entity.

• Foreign Exchange Proof Is Critical: A valid BRC or FIRC acts as primary evidence that you received export proceeds, making it key to GST refund eligibility.
• Place of Supply Clarity: You must clearly establish that the place of supply is outside India. This can be challenging for digital, consulting, and SaaS services, where contracts, invoices, and usage details need to consistently support the overseas supply.
• Timely Realisation of Funds: You need to receive export proceeds within the prescribed timelines. Delays in foreign payments can postpone refund claims and block working capital.
• 2025 Compliance Changes: Refund claims for services with IGST payment now follow invoice-based filing through Statement 2. With tax-period selection removed, accurate and consistent invoice data has become even more important.

How to Avoid Common Challenges and Delays in GST Refund Processing?

Even with improved systems and faster workflows, GST refunds can still get delayed if data or documentation does not line up. Most issues arise from avoidable gapsmismatched returns, missing proofs, or late responses. Knowing where exporters usually slip helps you prevent rejections and keep refunds moving.

Ensuring Accuracy in GST Returns and Documentation

• Reconcile GSTR-1, GSTR-3B, and GSTR-2A regularly to catch mismatches before filing a refund.
• Ensure shipping bill, tax invoice, and EGM details match exactly for goods exports.
• Upload complete, legible supporting documents in the prescribed format to avoid deficiency memos.
• Double-check refund calculations in Form RFD-01, especially turnover and ITC figures under Rule 89(4).

Adhering to Timelines and Responding to Notices

• File refund claims within two years from the relevant date as prescribed under Section 54 of the CGST Act.
• Re-file promptly if a Form GST RFD-03 (Deficiency Memo) is issued, as the original refund application is closed and cannot be corrected.
• Respond to Form GST RFD-08 (Show Cause Notice) within 15 days to avoid rejection or further delays.
• Track delays closelyif refunds are not issued within 60 days, interest becomes payable by the department.

Navigating Portal Functionalities and Expert Assistance

• Stay updated on GST portal changes, especially invoice-based filing and invoice-locking rules.
• Use Track Application Status with your ARN to identify pending actions early.
• Watch for issues like partial payment receipts for export invoices, which can delay refunds.
• Remember that ITC on capital goods remains restricted for refunds and can impact claim values.
• Seek professional help for complex reconciliations, notices, or appeals.

Common GST Refund Issues and How to Fix Them

What Happens After Filing Your GST Refund Application?

Once you submit your GST refund application, the process moves into a defined scrutiny and approval workflow. After submission, you can expect the following sequence:

• Application Scrutiny: Your refund application gets assigned to a refund processing officer for verification.
• Acknowledgement (RFD-02): Issued if the application is complete. This confirms formal acceptance for processing.
• Deficiency Memo (RFD-03): Issued if details or documents are missing. You must file a fresh application after correction.
• Clarifications or Notices (RFD-08): Raised if the officer needs additional explanations or documents.
• Provisional Refund (RFD-04): Eligible exporters may receive up to 90% of the refund within 7 days from the date of acknowledgement. The acknowledgement itself is generally issued within 15 days of filing, enabling faster access to funds for eligible exporters.
• Final Order (RFD-06): Issued after detailed scrutiny to either sanction the refund or reject it.
• Payment Order (RFD-05): Triggers credit of the sanctioned amount to your bank account. Any rejected amount or excess provisional refund is re-credited to the electronic cash or credit ledger through PMT-03.
• Withholding Order (RFD-07): Issued if the refund is temporarily held due to pending dues or investigations.
• Tracking via ARN: Use the ARN generated at filing to track real-time status on the GST portal.
• Withdrawal Option: You can withdraw the application using RFD-01W if required.

How Razorpay MoneySaver Export Account Streamlines Your Export Finances

Managing export payments efficiently is just as important as getting GST refunds on time. This is where the Razorpay MoneySaver Export Account fits in. 

With this you can:

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• Benefit from clear, upfront pricing on international transfers, helping you predict net realisations better.
• Get automatic eFIRC for eligible export transactions, simplifying GST refunds and DGFT-related compliance.
• Track all international collections through a single dashboard, making reconciliation easier across invoices and receipts.

Conclusion

A clear understanding of the GST refund process helps you unlock working capital faster, price your exports competitively, and avoid turning taxes into a cost. Whether you export goods, services, or digital offerings, timely refunds reduce cash flow pressure and support steady business growth.

GST systems will continue to evolve, so staying aligned with GSTN advisories and using digital filing and tracking tools is essential. When you follow a proactive compliance approach, maintain accurate documentation, and choose the right refund route, claims move faster with fewer disruptions. Done right, GST refunds become a financial advantage that strengthens your export operations and supports long-term global expansion.

FAQs

1. What is the primary purpose of GST refunds for exporters?

GST refunds ensure taxes paid on inputs do not become a cost, keeping exports zero-rated and competitive.

2. Are there new rules for GST refunds in 2025?

Updates include more automation, faster processing for some cases, and provisional refunds for eligible exporters.

3. What is a Letter of Undertaking (LUT) in GST export refunds?

LUT lets you export without paying IGST and claim refund of accumulated ITC instead.

4. What documents are crucial for GST refund for export of services?

Service invoices, contract, and proof of foreign exchange receipt such as BRC or FIRC are key.

5. What are common reasons for GST refund rejections?

Return mismatches, invoice inconsistencies, missing documents, and late filings are common causes.

6. How long does it typically take to process a GST refund?

The standard timeline is up to 60 days, though provisional refunds may be issued earlier for eligible cases.