Export of goods is a zero-rated supply under GST, offering two refund options. This comprehensive guide explains the documentation requirements, compliance obligations, and refund options for exporters.
Understanding Export of Goods
What Is an Export of Goods?
Export of goods means taking goods out of India to a place outside India. Under GST, export of goods is a zero-rated supply.
Zero-Rated Supply
Export of goods is a zero-rated supply, meaning:
- No GST is payable on the export
- The exporter can claim refund of ITC or IGST
Documentation for Export of Goods
1. Commercial Invoice
The commercial invoice should include:
- Name and address of exporter and importer
- Description of goods
- Quantity and value
- HSN code
- Terms of delivery (Incoterms)
2. Shipping Bill
The shipping bill is the primary customs document for export. It is filed electronically through ICEGATE.
The shipping bill filed by an exporter of goods shall be deemed to be an application for refund of integrated tax paid on the goods exported.
3. Bill of Lading / Airway Bill
Evidence of shipment of goods.
4. Packing List
Details of goods packed for export.
5. Export Invoice (GST)
The GST invoice for the export should show:
- Zero-rated supply
- Reference to LUT or bond (if applicable)
6. FIRC / BRC
Proof of receipt of export proceeds in foreign exchange.
Compliance Requirements
Before Export
Furnish LUT or Bond: Furnish LUT or bond for export without payment of IGST.
Verify Documentation: Ensure all documents are complete and accurate.
File GSTR-1: Report exports in GSTR-1.
During Export
File Shipping Bill: File shipping bill with customs.
Ensure Proper Packaging: Ensure goods are properly packaged for export.
After Export
Receive Export Proceeds: Receive export proceeds within the prescribed time.
File GSTR-3B: Report exports in GSTR-3B.
Claim Refund: Claim refund of ITC or IGST.
Refund Options for Export of Goods
Option 1: Export With Payment of IGST
Process:
- Pay IGST on the export
- File shipping bill
- Shipping bill serves as refund application
- Refund is processed
Advantage: Simplified process Disadvantage: Working capital blocked
Option 2: Export Without Payment of IGST (Under LUT/Bond)
Process:
- Furnish LUT or bond
- Export without payment of IGST
- Accumulate ITC on inputs
- Claim refund of ITC
Advantage: Working capital not blocked Disadvantage: More detailed process
Comparison of Refund Options
| Aspect | With Payment | Without Payment (LUT) |
|---|---|---|
| IGST Paid | Yes | No |
| Refund | Refund of IGST | Refund of ITC |
| Application | Shipping bill | FORM GST RFD-01 |
| Process | Simplified | More detailed |
| Working Capital | Blocked | Not blocked |
| LUT Required | Not required | Required |
Common Mistakes
Mistake 1: Not Furnishing LUT LUT must be furnished before exporting without payment of IGST.
Mistake 2: Incorrect Shipping Bill Errors in shipping bill lead to refund delays.
Mistake 3: Mismatch with GSTR-1 Shipping bill must match GSTR-1.
Mistake 4: Not Receiving Export Proceeds Export proceeds must be received within the prescribed time.
Best Practices
Furnish LUT in Advance: Furnish LUT before exporting.
Verify Documentation: Verify all documents before export.
Reconcile Regularly: Reconcile shipping bills with GSTR-1.
Track Export Proceeds: Track receipt of export proceeds.
Seek Professional Guidance: Export documentation and compliance have complexities; professional advice is recommended.
Export of goods under GST requires proper documentation and compliance. By understanding the refund options and maintaining proper documentation, exporters can claim refunds efficiently.
Need help with export compliance? Our GST experts provide comprehensive advisory and support.
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