LUT and bonds are instruments that evidence an undertaking by the taxpayer for exports. Here we give an insight into the details about when to opt for LUT and when to opt for Bond. Not only this but also how to claim the refund of IGST paid on exports in simple steps.

Latest Updates on LUT

15th February 2021
The facility to furnish a LUT for FY 2021-22 is available on the GST portal. The date of expiry of the validity of LUT is 31st March 2021.

Background to Exports and GST

The motive of any developing economy’s government is to expand its export base. The rationale for the same is to maintain the balance of payments, create job opportunities and boost economic growth. By providing certain benefits and reliefs on exports, the government promotes trade. The exporters can avail of these benefits and reliefs and thus undertake a free-flowing and beneficial trade. On the same note, the government provides certain benefits under the GST regime to exporters. There is no incidence of the tax (net effect) in a case where an exporter exports goods/services from India. 

Under the GST regime, the exporter has either of the two options:

• Export under bond without payment of tax
• Export along with tax payment and claim refund later

Brief on refund of IGST paid on Exports

Under GST laws, the exporter has the option to pay IGST on exports and then claim a refund of the same. The process of claiming a refund has been made easy for the export dealers. For the export of goods or services or both, there is no need to file a refund application (GST RFD-01) separately. 

The shipping bill filed by the exporter is a refund claim in itself. The exporter charges IGST on the invoice for export at the applicable rate (rates specified for different goods and services). On payment of IGST, the refund can be claimed for the following two elements:

• Input tax credits on goods and services which remained unutilised;
• IGST paid on export of goods or services.

The law specifies that a shipping bill is to be considered as a refund claim on satisfying the following two conditions.

• The person carrying export goods should file an export manifest and
• The applicant should have filed the returns in form GSTR-3B appropriately. A refund is initiated on filing table 6A in form GSTR-1.

On filing the above documents appropriately, the refund is processed by the department.  

Steps for claiming refund of IGST paid on Exports

The details as entered in Table 6A should match the details of invoices and shipping bills uploaded on the ICEGATE portal by exporters. 

The steps to upload documents on the ICEGATE portal is as follows: 

Step-1: Prepare documents in specified formats (PDF) for upload to the portal
Step-2: Login to the ICEGATE portal  (DSC is required to upload documents)

Step-3: Go to the e-SANCHIT tab for uploading the documents.   

Step-4: Click on the upload documents button. At a time, a batch of maximum 5 documents can be uploaded.  

Step-5: Select documents to be uploaded from the drop-down list. All the documents should be digitally signed before uploading. 

Step-6: Validate the DSC on the documents by clicking on the ‘Validate Document’ button for each document.

Step-7: Click on submit documents. Click the OK button on a disclaimer that will appear to accept the responsibility for the genuineness of the documents uploaded.    

Step-8: On successful submission, a unique IRN number will be generated which can be used for future reference. 

When to file form RFD-01 / RFD-01A (for tax refund in case of exports)

The excess of unutilised ITC (Input Tax Credit) can be claimed by way of filing Form GST RFD-01 (for online filing) / GST RFD-01A (for manual filing). A simple form is to be filled and filed accordingly with the department for claiming such refunds or any amount paid by mistake or the excess amount lying in the cash ledger.

The following details are to be filed in:

1. The GSTIN/ Temporary ID allotted
2. Legal name
3. Trade name (if any)
4. Address of the principal place of business
5. Tax period for which the claim of refund is made (if applicable)
6. Amount of IGST, CGST and SGST, Interest or cess (if any)
7. Grounds for the claim of refund (as per the list given)
8. Details of Bank account in which the refund is to be credited
9. Select ‘Yes’ if the document is required to be submitted in Annexure 1 for the reason selected at (vii). Else select ‘No’
10. Verification: To be signed by the authorised person

Certain time limits and frequencies of filing Form GST RFD-01/01A have been prescribed as under: 

Time limits:  The Form RFD-01/01A has to be filed within a span of two years from the relevant date. 

Frequency of filing: The Form RFD-01/01A has to be filed on a monthly basis by exporters. Within 15 days of filing such a refund application, the officer assesses for and verifies the completeness and correctness of all the details provided. Form RFD-02 is made available as an acknowledgement of the application filed. If any details are missed or incorrect, the assessing officer will intimate the exporter through Form RFD-03 which shall be updated and refiled. 

While processing the refund claim of unutilised ITC, the value of goods declared in the GST invoice and the value in the corresponding shipping bill/bill of export is examined and if both are different, then lower of the two values is sanctioned as a refund. In a scenario where the exporter is undertaking the export by furnishing a Bond, he/she need not pay taxes on such sale.