GST on Exports – All You Need to Know!

“Socho zara, agar tum ₹1,00,000 ka maal export karo, uspe ₹18,000 ka tax na do, aur ulta ₹18,000 wapas mile?”
Yes, that is the magic of Goods and Services Tax on Exports in India. It is not a myth. It is not a gimmick. It is the most underrated financial
jackpot in the business world.

Imagine this; Priya runs a small home décor export business from Jaipur.

She buys raw materials worth ₹50,000 and pays ₹9,000 as Goods and Services Tax (18 %).

She exports her handmade lamps to a client in Australia for ₹1,00,000 under a Letter of Undertaking.

Since exports are treated as zero-rated, she does not charge any tax to the client.

But wait… here comes the twist!

Priya can claim back her ₹9,000 Goods and Services Tax paid on inputs from the government. That means more cash in her bank, no extra tax burden on the client, and a win-win deal across borders.

Export karo, refund lo, aur business ko turbo mode mein daalo!

In this blog, we will spill how GST on Exports works, who gets the benefit, how to file for refunds, and how your business can unlock tax-free profits with real-world numbers, tables, and examples.

Different Categories of Exports with Price and GST Rate
 

As seen above, GST on exports is consistently zero, but the input tax refund becomes a sweet reward.

Real Talk: What GST on Exports Looks Like in Real Life

If you are wondering how this whole zero tax but full refund idea plays out in the real world, let us introduce you to four everyday Indian exporters who are cashing in the Goods and Services Tax on Exports advantage like pros.

Read More – GST on Import of Services

Seema’s Shining Success – Handmade Jewellery from Jaipur

Meet Seema, a jewellery artisan from the royal streets of Jaipur. She ships her handmade silver chokers and bangles to a boutique in Canada.

• Export Value: ₹3,00,000
   
• GST on Invoice: 0 %
   
• Tax Paid on Inputs (like silver, polish, tools): ₹45,000
   
• Refund Received: ₹45,000
   

Seema did not charge a single rupee of tax to her overseas client, but the government gave her ₹45,000 back. Why? Because every paisa she paid while making those gorgeous pieces qualifies as input tax credit. Pure profit, tax-free.

Ankit’s Code, Global Mode – Software Services from Bengaluru

Next is Ankit, a full-stack developer running a software firm in Bengaluru. He recently completed a project for a UK-based client.

• Export Value: ₹10,00,000
   
• GST Charged: 0 %
   
• GST Paid on Tools, Hosting, and Tech Services: ₹1,20,000
   
• Refund Claimed: ₹1,20,000
   

Ankit sent the invoice in foreign currency, submitted the required documents, and boom – his ₹1,20,000 refund landed smoothly. No tax charged, no loss on inputs.

Rina’s Organic Revolution – Assam’s Tea in London’s Cups

Rina runs a tea plantation in Assam and sells beautifully packaged organic tea to a chain of London cafes.

• Export Value: ₹1,20,000
   
• GST on Export: Zero
   
• Input Tax on Packing, Logistics, Equipment: ₹18,000
   
• Refund Processed: ₹18,000
   

Rina follows the export protocol like a pro and gets every rupee she paid back in her account. That is 18,000 reasons to keep exporting more.

Raj’s Timber Trail – Wooden Furniture from Punjab to Dubai

Raj owns a small furniture workshop in Punjab. He exported a consignment of elegant wooden chairs and tables to a Dubai home decor store.

• Export Invoice: ₹5,00,000
   
• Tax Charged: Nil
   
• GST Paid on Timber, Labour, and Transport: ₹72,000
   
• Refund Filed: ₹72,000
   

With proper bills and timely filings, Raj unlocked his ₹72,000 refund in full. His goods reached Dubai, and the money circled right back to his wallet.

HSN Codes for Exports – Decode Your Exports 

Every exported item must be tagged with a Harmonised System of Nomenclature (HSN) code. This ensures the right classification and smooth customs clearance.
 

Exporters must use eight-digit HSN codes for all foreign shipments. Incorrect coding can cause refund delays or customs queries.

Types of Exports and Their GST Applicability

Let us demystify how different types of exports are treated under the goods and services tax.
 

Whether you export a coconut or code, GST on exports lets you avoid tax and keep your working capital flowing.
 "Khaali GST, pura refund – export mein lagao full fund!"

How GST on Exports Works – With Maths

Example 1: Textile Exporter in Surat

Ramesh owns a textile firm in Surat.

• Input purchases: ₹4,00,000
   
• GST paid on inputs: 18% = ₹72,000
   
• Export sales: ₹6,00,000
   
• Export method: LUT (no tax paid)
   

Ramesh files GSTR-1 and GSTR-3B and attaches shipping bills. He gets a full refund of ₹72,000.

Result?
No GST paid, but Ramesh pockets ₹72,000 back from the tax authorities!

Example 2: IT Services Exporter in Bengaluru

Neha runs a software agency.

• Expenses on software licences: ₹2,00,000
   
• GST on licences: 18% = ₹36,000
   
• Export invoice: ₹10,00,000
   
• Export method: Paid IGST of ₹1,80,000
   

She uses ₹36,000 ITC to pay part of ₹1,80,000 IGST and pays the remaining ₹1,44,000 via bank. After export, she claims a refund of ₹1,80,000.

Result?
Not only does Neha avoid permanent tax outflow, she ensures input credits are preserved.

Example 3: Agri-Exporter from Assam

Kiran exports 1,000 kg of Assam tea.

• Cost of goods: ₹1,50,000
   
• GST on packing materials: ₹12,000
   
• Freight GST: ₹6,000
   
• Export price: ₹2,50,000
   
• Total ITC: ₹18,000
   

She exports under LUT. Her refund claim fetches ₹18,000, improving her margins.

Input Tax Credit on Exports 

GST on exports would not be half as effective without the magic of input tax credit (ITC).

Let us break it down:

• You buy raw materials, packaging, transport and software.
   
• You pay GST on each of those.
   
• You export the final good or service with zero GST.
   
• You claim back all that input tax from the government.

Mini Math Recap
 

Total GST refund claimable: ₹43,500

This refund keeps exporters afloat and enables smoother business operations.

Also Read - GST On Ocean Freight

 "Export ki planning ho sahi, toh GST ka paisa mile bhai!"

Practical Tips for Exporters – Beat the System, Not the Clock
 

1. Register on the GST Portal with correct details and select the export option.
    
2. File LUT/Bond annually to avoid paying IGST upfront.
    
3. Maintain proper invoices with export declarations.
    
4. Track shipping bills and bank realisation certificates.
    
5. Submit refund claims promptly within two years of export date.

Common Mistakes to Avoid
 

• Using incorrect HSN codes.
   
• Failing to file LUT on time.
   
• Missing deadlines for realisation of payment.
   
• Submitting mismatched invoice and shipping bill data.
   
• Claiming refunds without proper reconciliation of GSTR-1 and GSTR-3B.
   

Stay alert, stay funded!

Conclusion– Exporting is Rewarding!

In short, GST on exports is one of the most rewarding parts of India’s tax system.
It helps Indian products reach global shelves without being burdened by double taxation.
The government ensures exporters are not disadvantaged.

From sarees in Sweden to spices in Spain, Indian exporters are thriving thanks to this zero-rated model.

So remember:

• Export more.
   
• Pay no GST.
   
• Claim back every rupee of input credit.
   

"Chhodo tension, lo GST ka pension – bas export karte jao, refund lete jao!"

For more details or to file returns, visit the official GST portal or your state tax department.

FAQs on GST on Exports

Q1: Can a startup claim input credit on export?
Yes. Startups can claim ITC even if they operate under LUT.

Q2: Is GST zero for service exporters?
Yes, provided the service is consumed outside India and foreign currency is received.

Q3: Do exporters have to file GSTR forms?
Yes, GSTR-1 and GSTR-3B must be filed for refund eligibility.

Q4: Can GST refund be claimed if payment is delayed from foreign client?
Refund can only be claimed if payment is received within nine months.

Q5: What happens if shipping is delayed beyond three months?
Tax becomes payable unless extension is obtained.
 

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