GST Refund — Export of Services | Savlana Init

GST Compliance · Export of Services Refund

GST Refund on Export of Services — Zero-Rated. ITC Recovered.

Export of services is zero-rated under GST. If your ITC is accumulating because you supply under LUT without charging IGST, we prepare your RFD-01 refund claim under Rule 89, compile FIRC/BRC evidence, and recover your accumulated ITC in cash.

Export of services is a zero-rated supply under Section 16 of the IGST Act — the supplier does not charge GST on the export invoice but retains the right to claim input tax credit on all inputs and input services used in making that supply. Service exporters who supply under a Letter of Undertaking (LUT) do not charge IGST to their foreign clients but accumulate ITC on their domestic inputs — and this ITC is refundable in cash under Section 54 of the CGST Act read with Rule 89 of the CGST Rules.

The refund application under Rule 89 requires the service exporter to file Form GST RFD-01 with a Statement of Invoices (Annexure B) of the export invoices for which the refund is claimed, proof of foreign exchange realisation (FIRC — Foreign Inward Remittance Certificate, or BRC — Bank Realisation Certificate), and the LUT filing confirmation. The refund quantum is computed using the Rule 89(4) formula: Net ITC × (Zero-Rated Supply Turnover / Adjusted Total Turnover). This formula limits the refund to the ITC proportionate to the zero-rated export share of total turnover.

For service exporters who paid IGST on export invoices (without holding an LUT), a separate refund route under Rule 96A applies — the IGST paid is refundable based on GSTR-1 export data and foreign exchange realisation. We handle both routes — the LUT-based ITC refund (Rule 89) and the IGST-paid refund (Rule 96A) — and advise on which route is more cash-flow efficient for your business.

Our Export Services Refund Services

Rule 89 ITC Refund — LUT Route

Filing of Form GST RFD-01 for refund of accumulated ITC on export of services under LUT — with Annexure B, FIRC/BRC compilation, and Rule 89(4) formula computation.

FIRC / BRC Compilation & Matching

Compilation and verification of Foreign Inward Remittance Certificates or Bank Realisation Certificates — matching each export invoice to its foreign exchange receipt.

LUT Verification & Linkage

Confirmation that the LUT (Form RFD-11) for the relevant year is filed and linking the LUT number to the export invoices in the refund application.

Rule 89(4) Refund Quantum Computation

Computation of the maximum eligible refund under the Rule 89(4) formula — Net ITC × Zero-Rated Turnover / Adjusted Total Turnover — ensuring the maximum refund is claimed.

Rule 96A — IGST Paid Refund

Refund of IGST paid on export of services where no LUT was held — matched against GSTR-1 export data and foreign exchange realisation records.

Zero-Rating Conditions Verification

Verification that all five conditions for export of services are met — supplier in India, recipient outside India, place of supply outside India, foreign exchange payment, and non-establishment relationship.

RFD-03 Deficiency Memo Response

Comprehensive replies to officer deficiency memos on FIRC mismatches, turnover computation disputes, or ITC eligibility queries.

Refund Tracking to RFD-06 Sanction

End-to-end refund tracking — from RFD-02 acknowledgement through provisional sanction (RFD-04) to final sanction (RFD-06) and bank credit.

Our Process

Eligibility & Route Assessment

We confirm the five export-of-services conditions are met, and determine the optimal refund route — Rule 89 (LUT/ITC) or Rule 96A (IGST paid).

FIRC/BRC Matching & Rule 89(4) Computation

Every export invoice is matched with its FIRC/BRC. The Rule 89(4) refund formula is applied and the maximum eligible refund is computed.

RFD-01 Preparation & Filing

Form GST RFD-01 with Annexure B and all supporting documents is filed within the 2-year limitation period.

Deficiency Response

Any RFD-03 deficiency is replied to within the response window — FIRC mismatches corrected, turnover reconciled, and resubmission made promptly.

Provisional & Final Sanction Follow-Up

The refund is tracked from RFD-02 through RFD-04 provisional sanction and RFD-06 final sanction to bank account credit.

Why It Matters

✓Accumulated ITC on export services recovered in cash

✓Rule 89(4) formula correctly applied — maximum refund computed

✓LUT confirmed and linked to all export invoices before filing

✓FIRC/BRC matched to every invoice — no foreign exchange gap

✓IGST-paid export refund via Rule 96A also handled

✓2-year limitation period monitored — no refund lapsed by delay

✓Deficiency memos replied to with correct document compilation

✓Bank credit confirmed after final RFD-06 sanction order

Frequently Asked Questions

All five conditions must be satisfied: the supplier is in India; the recipient is outside India; the place of supply is outside India; payment is received in convertible foreign exchange or Indian rupees where RBI permits; and the supplier and recipient are not merely establishments of the same entity in different countries. All five must be met for the zero-rating and ITC refund benefit to apply.

Yes, through a different route. Without an LUT, IGST must be paid on each export invoice and claimed as a refund under Rule 96A. This creates a cash-flow burden. The preferred approach is to file an LUT at the start of each year — supply without IGST — and claim the accumulated ITC refund under Rule 89. Filing the LUT is a simple online process and there is rarely a good reason not to hold one.

Refund = Net ITC × (Turnover of zero-rated supply of services / Adjusted Total Turnover). Net ITC is the ITC on inputs and input services for the period (excluding ITC on capital goods). Adjusted Total Turnover is total turnover in the state minus exempt supplies. The formula ensures the refund is proportionate to the export share of turnover.

A Foreign Inward Remittance Certificate (FIRC) is issued by the recipient bank evidencing receipt of payment in foreign exchange. It is required for each export invoice to prove foreign exchange realisation. Where FIRC is not available, a Bank Realisation Certificate (BRC) is an accepted alternative. Without FIRC/BRC for each invoice, the zero-rating conditions are not fully demonstrated.

No. The Rule 89(4) formula specifically excludes ITC on capital goods from the Net ITC computation. ITC on capital goods must be utilised against domestic output tax liability — it cannot be claimed in the export services refund. This is a common error in refund computations that results in officer queries and deficiency memos.

Under FEMA, export service proceeds must be realised within 9 months (extendable by RBI). For GST refund purposes, the FIRC/BRC is the evidence of realisation — the refund may be filed before full realisation, but final sanction typically requires FIRC for each invoice. Provisional sanction may be released pending FIRC submission.

Exporting services with accumulated ITC? Claim your GST refund.

We verify your zero-rating conditions, compile FIRC/BRC evidence, compute the Rule 89(4) refund, file RFD-01, and follow up to final sanction — recovering your stranded ITC in cash.