Deemed Exports Under GST: Rules, Notification 48/2017, and Refund Process

When you supply goods within India that are ultimately used for exports, paying GST does not seem like a fair deal and can strain your cash flow. This is a common challenge for manufacturers and suppliers who support exporters but do not export goods themselves. To address this, the government introduced Deemed Exports under GST as a targeted relief.

Under Section 147 of the CGST Act, certain domestic supplies qualify as deemed exports. Although the goods never leave India, the law treats these transactions as exports for tax benefit purposes. Notification 48/2017 identifies the eligible categories and sets the framework for claiming a GST refund.

This guide explains who qualifies, how deemed exports differ from zero-rated supplies, and how the refund process works in practice—so you can recover blocked working capital with clarity and confidence.

What Is Deemed Export Under GST?

A deemed export under GST refers to a supply of goods notified by the government under Section 147 of the CGST/SGST Act, 2017, which the law treats as an export even though the goods do not physically move out of India. The intent is to remove the tax burden from supplies linked to exports.

For a transaction to qualify as a deemed export, all of the following conditions must be met:

• Goods Only: The benefit applies strictly to goods. Services are excluded.
• Manufactured in India: The goods supplied must be produced or manufactured within India.
• No Physical Export: The goods must remain in India after supply.

Importantly, the supplier can receive payment in Indian Rupees or convertible foreign exchange. This legal treatment ensures tax neutrality for the final exporter and prevents GST from blocking working capital.

Which Supplies Are Notified as Deemed Exports?

The government has clearly defined which domestic supplies qualify as deemed exports through Notification No. 48/2017–Central Tax. Only supplies falling within these notified categories are eligible for GST refund benefits.

Supply Against Advance Authorisation (AA)

• Advance Authorisation allows duty-free import of inputs used to manufacture export goods.
• When the same inputs are sourced domestically against AA, the law treats the supply as a deemed export.
• This ensures domestic suppliers compete fairly with foreign suppliers.

Supply to Export Oriented Units (EOU)

• Export Oriented Unit / Electronic Hardware Technology Park Unit (EHTP) / Software Technology Park Unit (STP) / Bio-Technology Park Unit (BTP) units operate exclusively for exports.
• Supplies to these units qualify as deemed exports since the output ultimately leaves India.
• This treatment avoids GST becoming a cost in export-linked supply chains.

Supply Against EPCG Authorisation

• Export Promotion Capital Goods (EPCG) covers capital goods used in pre-production, production, or post-production.
• Domestic suppliers of machinery benefit from deemed export status.
• This supports local manufacturing while meeting export obligations.

Deemed Export Categories Eligible for GST Refund

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How Is Deemed Export Different from Zero-Rated Supply?

At first glance, deemed exports, physical exports, and SEZ supplies may seem similar because all of them support exports. The tax treatment, however, works very differently. Understanding this distinction helps you choose the right compliance path and avoid refund delays.

The key difference lies in goods movement and tax payment. Zero-rated supplies under Section 16 of the IGST Act focus on exports that either leave India or move into an SEZ developer or unit. Deemed exports, on the other hand, remain within India but still qualify for export-related tax benefits.

Comparison: Deemed Export vs Physical Export / SEZ Supply

What Are the Procedural Conditions for Deemed Exports?

Deemed exports come with a clear, step-by-step compliance flow. Following it in sequence helps you avoid objections during refund processing.

• Step 1: Prior Intimation (Form A)
  
  Before the supply, the recipient unit must issue Form A. This intimation goes to you (the supplier) and to both jurisdictional GST officers. The unit must obtain prior approval from the Development Commissioner for the procurement covered under Form A.
• Step 2: Issue the Tax Invoice
  
  You must raise a regular GST invoice and charge GST at the applicable rate. Deemed exports do not allow supply under LUT or Bond.
• Step 3: Invoice Endorsement
  
  After receiving the goods, the recipient endorses the invoice as proof of receipt and forwards copies to the concerned tax authorities.
• Step 4: Record Keeping (Form B)
  
  The recipient maintains Form B, recording receipt use and removal of goods. These records support refund claims and future audits.

Who Can Claim the Refund of Deemed Export Under GST?

One practical advantage of deemed exports under GST is the flexibility in who can claim the refund. The law allows only one refund per transaction. If the recipient claims the benefit, the supplier cannot claim it for the same supply, ensuring there is no double benefit.

When the Supplier Claims the Refund

The supplier can apply for a refund of GST paid on deemed export supplies only when the recipient does not avail input tax credit (ITC). In such cases, the recipient must provide a written undertaking confirming that ITC has not been claimed and will not be claimed in the future. This route is commonly used when the supplier wants to unlock working capital directly.

When the Recipient Claims the Refund

The recipient can claim the refund after paying the supplier the full invoice value, including GST. Once the payment is made, the recipient avails input tax credit on the tax paid. This approach suits export-focused units that prefer to manage and utilise their own GST credits.

How to File a Refund Claim for Deemed Exports?

Filing a deemed export refund works best when you treat it as a document-led process. Missing even one item can delay your claim, so use this checklist before you file.

Document Checklist (as per Notification 49/2017)

• Statement 5B: Invoice-wise details of deemed export supplies for which refund is claimed.
• Acknowledgement by Jurisdictional Tax Officer: A certificate or endorsement confirming that the recipient has received the goods.
• Undertaking by Recipient: A written declaration confirming that the recipient has not availed ITC and will not claim a refund for the deemed export supplies, allowing the supplier to claim the refund instead.

Process Summary:

You must file Form GST RFD-01 (refund application filed online on the GST Portal) within two years from the relevant date, as defined under GST law. Once submitted, the tax officer verifies the documents and processes the refund of GST paid on deemed export supplies.

What Are the Reporting Requirements in GSTR-1 and GSTR-3B?

Accurate return filing is critical if you want to secure a deemed export GST refund. Even small reporting errors can delay or block the claim.

GSTR-1 Reporting

You must report deemed export supplies in Table 6C of GSTR-1. This table is specifically meant for deemed exports notified under GST.

Key details to capture include:

• GSTIN of the recipient
• Invoice number and date
• Taxable value and GST amount

GSTR-3B Reporting

In GSTR-3B, deemed exports must be disclosed in Table 3.1(b) under outward taxable supplies (zero-rated and deemed exports).

Consistency is essential. Any mismatch between Table 6C of GSTR-1 and Table 3.1(b) of GSTR-3B can trigger queries or lead to refund rejection, increasing your working capital cycle.

How Razorpay Supports International Businesses

As cross-border trade grows, exporters and digital businesses need payment systems that work smoothly across countries while staying compliant in India. Razorpay addresses these needs by combining international collections, transparent pricing, and export-friendly documentation into a single platform. Here’s how it supports international businesses:

Accept Payments From Customers Worldwide

Razorpay lets you accept international payments from 180+ countries using global cards, local bank transfers, Apple Pay, and Google Wallet. This works well for SaaS companies, freelancers, and exporters selling to overseas clients without setting up multiple payment providers.

Receive Funds Through Global Bank Transfers

With Razorpay’s international bank transfer setup, your overseas customers can pay you through familiar local rails such as ACH, SEPA, FPS, and SWIFT. Razorpay creates a virtual overseas account in your name, making it easier for clients to pay you like a local business.

Transparent Pricing With No Forex Markup

Razorpay offers clear, upfront pricing on international collections. For bank transfers, there is no forex markup, which helps you know exactly how much you will receive after conversion and settlement. This clarity supports better cash-flow planning.

Automatic Conversion and INR Settlement

Funds collected in foreign currency are automatically converted and settled to your Indian bank account in INR. You do not need to manage separate foreign currency accounts or handle manual conversions.

Built-In Compliance Support

For eligible export transactions, Razorpay provides automatic digital FIRC / FIRS, reducing manual follow-ups with banks. This helps you stay aligned with FEMA and export documentation requirements.

Centralised Dashboard for Better Control

All international card and bank transfer payments appear in a single dashboard, making it easier to track receipts, monitor settlements, and reconcile export revenues as your global business scales.

Conclusion

Deemed exports are a vital liquidity tool for domestic manufacturers and suppliers who sell to exporters. By allowing GST paid on notified domestic supplies to be refunded, the framework prevents working capital from getting locked in long tax cycles. 

The golden rule is simple: GST must be paid first and claimed back later, unlike certain zero-rated supplies such as SEZ transactions. Following the process carefully is important. Submitting Form A and Form B on time reduces delays, disputes, and unnecessary litigation. When you handle deemed exports correctly, they support smooth compliance and help Indian exporters stay competitive in global markets.

FAQs

1. Is the 0.1% concessional GST rate applicable to deemed exports?

The 0.1% rate mainly covers merchant exports under Notification 40/2017. Supplies to EOUs (deemed exports) may qualify if meeting merchant export conditions; otherwise, standard rates apply with later refund.

2. Can a supplier claim a refund for deemed exports if the recipient avails ITC?

No. Only one party can claim the benefit.  If the supplier claims the refund, the recipient must undertake not to avail Input Tax Credit on that supply.

3. What is the time limit for filing a refund claim for deemed exports?

You must file Form GST RFD-01 within two years from the relevant date, typically linked to the date on which the GST return relating to the deemed export supply is filed. 

4. Are services covered under deemed exports in GST?

No. Deemed export provisions apply only to the supply of goods, not services.

5. Does a deemed export supply require a Letter of Undertaking (LUT)?

No. Deemed exports must be made on payment of GST and cannot be supplied under LUT or Bond.