Topic guide · 16 provisions

Refunds

Getting your own money back

Getting your own money back out of the system.

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Refunds arise in three main situations: you exported without paying IGST and have credit piling up, you exported with IGST and want it back, or your inputs are taxed higher than your output so credit accumulates that you can never use.

Exporters choose between two routes. File a Letter of Undertaking and export without paying IGST at all, then claim refund of accumulated credit – better for cash flow. Or pay IGST on the export and get it back automatically once shipping bill data matches, with no separate application for goods.

The law puts a clock on the department: acknowledgment in 15 days, 90% of a zero-rated claim provisionally within 7 days, and a final order within 60 days – with interest payable to you if they miss it.

The two export refund routes Route 1: Export under LUT No IGST paid upfront File RFD-11 once each year Claim refund of accumulated credit Better for working capital Route 2: Pay IGST, claim back IGST paid on the export invoice No separate application for goods Refund follows shipping bill matching Money is tied up until it arrives
Most regular exporters use the LUT route, because paying tax you will only get back later is expensive.

Worked example

What the inverted duty formula leaves behind

Input tax paid on goods ₹18,00,000 Inputs taxed at 18%
Input tax paid on services ₹6,00,000 Freight, job work, professional fees
Output tax collected at 5% ₹9,00,000 Finished product is a merit item

Credit accumulates, but the Rule 89(5) formula counts only goods – the ₹6,00,000 on input services stays stuck on the books. Knowing this before you price the product is the difference between a margin and a surprise.

The mistakes that cost people money

Not theoretical risks — the ones we actually see land on clients’ desks.

Letting the LUT lapse on 1 April. It is valid for one financial year, and exporting without a live LUT means IGST becomes payable.

Filing an incomplete refund application. The 60-day clock runs from a complete application, so a deficiency memo resets it.

Missing the two-year limitation from the relevant date. It arrives faster than exporters expect.

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Refunds — the complete guide

9 pages covering all 16 provisions, with the plain-language explanation and practice notes for each. Print it, keep it, share it with your accountant.

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Stuck on refunds for your own business?

You now know more about this than most people who will advise you on it. If the numbers are big enough that being wrong matters, send us the facts – we will tell you where you stand before you commit to anything.

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