GST export compliance checklist 2026: LUT, refunds, e-invoicing and common mistakes
India's GST landscape for exporters has undergone its most significant transformation since 2017. The 56th GST Council Meeting (September 2025) launched "GST 2.0" — a sweeping rate restructuring that collapsed four slabs into three, while Budget 2026 formally deleted Section 13(8)(b) of the IGST Act, finally enabling intermediary service exporters to claim zero-rated benefits. Alongside these structural shifts, a new risk-based 90% provisional refund mechanism became operational in November 2025, reducing average refund processing times for compliant exporters from 45 days to roughly 7 days. This GST export compliance checklist for FY2026-27 covers every critical compliance requirement, common mistakes, and recent rule changes that Indian exporters need to know — updated April 2026.
GST 2.0 Explained: What the 56th GST Council Changed for Exporters in 2025
For Indian exporters, GST 2.0 — as the 56th Council's changes are now widely called — represents the most consequential shift since the tax's 2017 launch. Two core rate slabs now apply — 5% (merit/essentials) and 18% (standard) — plus a new 40% slab for sin and luxury goods. The 12% and 28% slabs were abolished, effective September 22, 2025, with ~90% of items from the 28% slab moved to the 18% slab and ~99% of items from the 12% slab moved to the 5% slab. These changes were formalised via Notification Nos. 09/2025 to 17/2025 – Central Tax (Rate), all dated September 17, 2025.
For exporters, this rate simplification corrected longstanding inverted duty structures in textiles, footwear, fertilisers, paper, and packaging — sectors where input tax rates exceeded output rates, trapping ITC. Exporters in these sectors should see improved ITC refund calculations under Rule 89(4).
Budget 2026 (February 1, 2026) formalised several additional 56th Council recommendations through the Finance Bill, 2026:
- Section 13(8)(b) of the IGST Act formally omitted — intermediary services (IT, BPO, consulting, brokerage, GCC operations) to overseas clients now follow the default place-of-supply rule (recipient's location), making them zero-rated exports with full ITC refund eligibility. This is expected to resolve a large backlog of pending show-cause notices running into thousands of crores.
- Finance Bill 2026 proposes to amend Section 54(6) — extending 90% provisional refund scope to inverted duty structure (IDS) cases, not just zero-rated supplies. Exporters should verify the operative notification before relying on this in a refund claim.
- Finance Bill 2026 proposes to amend Section 54(14) — removing the ₹1,000 minimum refund threshold for IGST-paid export refunds, which would benefit small and e-commerce exporters with high-volume, low-value shipments. Confirm operative notification before filing.
- Finance Bill 2026 proposes to amend Section 15(3) — post-sale discounts would no longer require a pre-existing agreement; only credit note issuance and ITC reversal by the recipient would be needed. Check the Finance Act gazette before updating your discount policy.
The 55th GST Council Meeting (December 21, 2024) had earlier reduced the compensation cess on supplies to merchant exporters to 0.1%, bringing it in line with the GST rate. It also made the Input Service Distributor (ISD) mechanism mandatory from April 1, 2025 — entities receiving common input service invoices for multiple GSTINs must now register as ISD and file Form GSTR-6 monthly.
LUT Filing for FY 2026-27: Deadline, Rules and What Happens If You Miss It
The Letter of Undertaking (LUT) allows exporters to make zero-rated supplies without paying IGST upfront, thereby avoiding a 2–6-month blockage of working capital. Filed electronically via Form GST RFD-11 under Rule 96A of the CGST Rules, the LUT is governed by Notification No. 37/2017-CT and Circular No. 8/8/2017-GST.
For a walkthrough of the portal process, see our step-by-step LUT filing guide.
Key deadlines and rules for LUT filing FY2026-27 — and what's changed since last year:
| Parameter | Detail |
|---|---|
| FY 2026-27 LUT status | Deadline was March 31, 2026 — if unfiled, file immediately. IGST applies at 18% p.a. on all FY2026-27 exports made without a valid LUT in place. LUT validity: April 1, 2026 to March 31, 2027. |
| Validity | One financial year (April 1 to March 31) |
| Eligibility | All GST-registered exporters NOT prosecuted for tax evasion exceeding ₹2.5 crore |
| Filing fee | None |
| Deemed acceptance | If not accepted within 3 working days |
| Witnesses required | Two independent witnesses with name, occupation, and address |
Failing to renew the LUT annually is the single most common and expensive compliance mistake exporters make. The LUT expires every March 31, and exports made before a valid LUT is filed are liable to IGST at the applicable rate plus interest at 18% per annum from the invoice date. There is no retroactive saving — filing the LUT after exports have already been made does not cure the deficiency (though Circular 37/11/2018-GST provides some relief where exports are substantively established).
When the LUT is revoked: If goods are not exported within 3 months of the invoice date (or the service payment is not received within 1 year), the LUT facility is deemed withdrawn. During withdrawal, exports must be made on payment of IGST or under a bank guarantee. LUT is restored immediately upon paying the amount due (tax + interest).
Bond/Bank Guarantee requirements remain unchanged: exporters prosecuted for tax evasion exceeding ₹2.5 crore must furnish a bond (on non-judicial stamp paper) with a bank guarantee typically not exceeding 15% of the bond amount. Running bonds are permitted. The Commissioner may waive the bank guarantee based on the exporter's track record. In practice, the LUT route dominates — bonds are increasingly rare.
The 12 most common GST mistakes Indian exporters make
Avoid all of these with our step-by-step LUT filing guide for FY2026-27 — then come back to this checklist to verify the rest.
Invoice number mismatch (Error SB005) is the most frequent — and often irrecoverable — mistake. When the invoice number in GSTR-1 Table 6A doesn't match the shipping bill filed with customs, the IGST refund is automatically rejected. Since shipping bills cannot be amended after EGM filing, SB005 errors require special intervention through customs authorities. The same GST-compliant export invoice must be used in both the customs and GST systems.
Beyond SB005, the critical mistakes cluster around six areas:
LUT and timing errors: Not renewing LUT annually before March 31; filing LUT after the first export invoice of the FY (requiring IGST payment on all prior exports); not exporting goods within the 3-month window from invoice date, triggering IGST liability plus 18% interest.
GSTR-1 and GSTR-3B mismatches: Reporting exports as normal sales in GSTR-3B Table 3.1(a) instead of 3.1(b); IGST amount in Table 3.1(b) being less than the total in GSTR-1 Table 6A (which blocks data transmission to ICEGATE entirely); omitting shipping bill number, date, or 6-digit port code from Table 6A; and reporting export invoices in the wrong return period.
E-invoicing failures: Not generating e-invoices for export transactions when turnover exceeds ₹5 crore AATO; missing the 30-day reporting window (now mandatory for AATO ≥ ₹10 crore from April 1, 2025 — IRP rejects late invoices); using incorrect supply type codes (must use EXPWP or EXPWOP); and setting the recipient PIN code incorrectly (must be 999999 for exports).
ITC classification errors: Treating exports as "exempt" instead of "zero-rated" — a distinction that determines whether full ITC can be claimed. Zero-rated supplies allow complete ITC; exempt supplies do not. Exporters also commonly include blocked credits under Section 17(5) (motor vehicles, food, club memberships) in their refund calculations.
HSN code mistakes: Using 4-digit HSN codes when 8-digit codes are mandatory for all export invoices, regardless of turnover. In 2025, the portal phased out manual HSN entry in GSTR-1 — codes must now be selected from a mandatory dropdown. Wrong HSN codes trigger IRP Error 2176, block e-invoice generation, and can lead to customs classification disputes.
FOB value discrepancies: If the FOB value on the shipping bill differs materially from the taxable value in GSTR-1, it can trigger refund rejection; in practice, only the lower of the two values is typically sanctioned per Circular 37/11/2018-GST. A 2% tolerance is widely cited in practitioner guidance, though this is not explicitly codified in the circular text.
GST Export Refund: IGST Refund vs ITC Refund Routes and 90% Provisional Mechanism
Exporters have two paths to recover GST on exports, both of which have been significantly improved by the November 2025 risk-based IGST refund provisional mechanism.
Route 1 — IGST refund via shipping bill (Rule 96): The shipping bill itself is the deemed refund application. No separate RFD-01 is needed for goods. ICEGATE auto-matches GSTR-1 Table 6A data with shipping bill and EGM records. When everything validates (code SB000), the refund is processed automatically. From November 2025, compliant exporters receive a 90% provisional refund within approximately 7 days; the balance is issued within 60 days. For service exports with IGST payment, a separate Form RFD-01 with Statement 2 is still required.
Route 2 — ITC refund under LUT/Bond (Rule 89): Exporters who ship without paying IGST claim refund of accumulated ITC via Form GST RFD-01 with Statement 3 (invoice details) and Statement 3A (computation). The refund formula under Rule 89(4) is: Refund = (Zero-rated supply turnover × Net ITC) ÷ Adjusted Total Turnover. Net ITC excludes ITC on capital goods. From 2025, refund filing shifted from tax-period-based to invoice-based filing — exporters enter invoice-level details directly, and invoices used in one application are locked from reuse.
Key refund timelines remain strict:
| Timeline | Period | Reference |
|---|---|---|
| Filing deadline | 2 years from relevant date | Section 54(1) CGST Act |
| Relevant date (goods) | Date ship/aircraft leaves India | Explanation (2)(a) to Section 54 |
| Relevant date (services) | Date of payment receipt in foreign exchange or invoice date, whichever later | Explanation (2)(b) to Section 54 |
| Provisional refund | 90% within 7 days of acknowledgment | Section 54(6), Rule 91 |
| Final refund order | Within 60 days of filing | Section 54(7) |
| Interest on delay | 6% p.a. from 61st day | Section 56 CGST Act |
| Interest (appellate order) | 9% p.a. if not paid within 60 days of appellate order | Proviso to Section 56 |
Top refund rejection reasons in order of frequency: (1) SB005 invoice number mismatch, (2) EGM not filed by carrier (SB002/SB006), (3) GSTIN mismatch between shipping bill and returns (SB003), (4) GSTR-3B Table 3.1(b) amount less than GSTR-1 Table 6A, (5) FOB value mismatch exceeding 2%, and (6) non-realisation of foreign exchange within FEMA-prescribed 9 months (triggering Rule 96B repayment obligation within 30 days).
Deficiency memos (Form RFD-03) carry a strict 15-day response window — failure results in the application being treated as withdrawn, requiring a fresh filing. However, the deficiency memo period is excluded from the 2-year limitation per Notification No. 15/2021-CT.
E-invoicing, HSN codes, and GSTR filing changes in 2025-2026
The e-invoicing threshold remains at ₹5 crore AATO as of February 2026 (per Notification 10/2023-CT, effective August 1, 2023). The major confirmed change is the 30-day reporting time limit — from April 1, 2025, businesses with AATO ≥ ₹10 crore must upload e-invoices to IRP within 30 days of invoice date; the IRP rejects late submissions and denies IRN generation. Two-factor authentication (2FA) also became mandatory for all e-invoice and e-way bill generation from April 1, 2025. Non-compliance with e-invoicing carries penalties of 100% of tax due or ₹10,000 per invoice, whichever is higher.
HSN code requirements are now strictly enforced. For exports, 8-digit HSN codes are mandatory regardless of turnover. For domestic B2B supplies, businesses with an AATO above ₹5 crore require 6-digit codes, while those below require 4-digit codes. From 2025 (Phase 3 HSN reporting), manual HSN entries in GSTR-1 have been replaced by a mandatory dropdown selection, with descriptions auto-populated from the master database. Table 12 of GSTR-1/1A has been bifurcated into B2B and B2C sections, and Table 13 (document details) is now mandatory for all taxpayers.
GSTR-1 and GSTR-3B filing for exporters requires careful attention to table placement: export invoices with IGST go in Table 6A, exports under LUT go in Table 6B, and SEZ supplies go in Table 6B as well. In GSTR-3B, all zero-rated supplies must appear in Table 3.1(b) — not Table 3.1(a). The IGST amount in GSTR-3B Table 3.1(b) must equal or exceed the total from GSTR-1 Tables 6A + 6B, or invoices will not transmit to ICEGATE. The amendment deadline for GSTR-1 corrections is November 30 of the following financial year or the annual return filing date, whichever is earlier.
ITC reconciliation has become more demanding since the Invoice Management System (IMS) was rolled out in late 2024. Recipients must actively accept, reject, or keep pending supplier invoices. From 2025, unaccepted invoices under IMS are automatically accepted and flow to GSTR-2B — check the latest GSTN advisory for the exact go-live date applicable to your turnover slab. A three-way reconciliation — IMS vs. GSTR-2B vs. GSTR-3B — is now the compliance standard.
Critically, zero-rated supplies (exports) are not treated as exempt for ITC reversal under Rules 42 and 43 — no reversal is required for the portion attributable to exports.
RoDTEP Scheme 2026: Rates, ARR Deadline and Budget Allocation Cut Explained
The RoDTEP scheme ran through March 31, 2026 per DGFT Notification No. 35/2025. For FY2026-27, the Union Budget allocated ₹10,000 crore — exporters should confirm the formal extension notification on the DGFT portal before filing ARR or claiming benefits for shipments from April 1, 2026 onwards. Current rates range from 0.3% to 4.3% of FOB value across 10,780+ HS lines for DTA exports. The scheme reimburses embedded non-GST taxes (electricity duty, VAT on fuel, mandi tax, stamp duty, toll charges) that are not covered by the GST ITC mechanism.
Exporters can claim both RoDTEP and IGST refund simultaneously — there is no conflict, as the two schemes cover different tax components. RoDTEP credits are issued as transferable e-scrips via ICEGAT and are usable only for paying Basic Customs Duty on imports. They are not subject to GST themselves and cannot be used for GST payment.
For eligibility criteria and claiming steps, read our complete RoDTEP claiming process.
The most significant development is a roughly 40–45% cut in FY2026-27 budget allocation — down to approximately ₹10,000 crore from the prior year's outlay. Exact figures are scattered across Union Budget expenditure statements; exporters should confirm allocations on the DGFT portal before projecting RoDTEP receivables. A Rate Review Committee was constituted in October 2025 (chaired by Neeraj Kumar Gupta) to rationalise the FY 2024-25 data. No formal multi-year extension has been announced beyond March 2026, though the budget allocation implies some continuation.
New compliance requirement — Annual RoDTEP Return (ARR): Exporters with total RoDTEP claims exceeding ₹1 crore in a financial year must file an ARR to demonstrate that the claimed taxes were actually incurred. The FY 2023-24 ARR deadline has been extended to March 31, 2026, with a composition fee of ₹ 15,000 (Public Notice No. 46/2025-2026). Non-filing leads to denial of benefits and scroll-out restrictions.
For RoSCTL (covering textile apparel and made-ups under HS Chapters 61, 62, 63), the same uncertainty applies — allocation has been substantially reduced for FY2026-27, though the exact notified figure should be verified on the DGFT portal.
GST Penalties for Exporters 2026: Late Fees, ITC Blocks and New Portal Rules
GST enforcement has materially tightened across several dimensions. Late fees remain at ₹50/day (₹25 CGST + ₹25 SGST) for regular GSTR-1/GSTR-3B returns, capped at ₹5,000 per return. Annual return (GSTR-9) late fees are ₹200/day, capped at 0.50% of annual turnover. Interest on late tax payment runs at 18% per annum; excess ITC claims attract 24% per annum.
Three enforcement changes particularly affect exporters. First, from late 2025, the GST portal has been restricting the filing of returns older than 3 years — ITC related to those periods risks permanent loss. Verify the exact cut-off applicable to your return type against the latest GSTN advisory. Second, from early 2026, hard portal validations block GSTR-3B filing when the claimed ITC exceeds the closing balance in the Electronic Credit Reversal and Reclaimed Statement — confirm the operative date against the GSTN portal advisory. Third, bank account details must be up to date on the portal — failure triggers automatic registration suspension, blocking return filing and e-way bill generation.
The GST Appellate Tribunal (GSTAT) launched on September 24, 2025 and began hearing appeals from December 2025. The deadline to file GSTAT appeals for orders communicated before April 1, 2026, has been extended to June 30, 2026 (S.O. 4220(E) dated September 17, 2025). This provides exporters a long-awaited appellate remedy below the High Court level.
Fraud and tax evasion penalties remain severe: 100% to 300% of tax evaded (minimum ₹10,000), with imprisonment ranging from 1 year (₹1–2 crore evasion) to 5 years (above ₹5 crore). The general penalty under Section 125 is capped at ₹25,000.
Zero-Rated Supply Documentation Checklist: What Indian Exporters Must Keep Ready
For exports to qualify as zero-rated supply under Section 16 of the IGST Act, Indian exporters must maintain precise documentation depending on their chosen route:
Under LUT (without IGST payment): Valid LUT (Form RFD-11) for the financial year; export invoices with GSTIN, invoice number, and 8-digit HSN/SAC codes; GSTR-1 Table 6B filed correctly; GSTR-3B filed for the period; shipping bill/BL/AWB; BRC/FIRC for foreign exchange receipt (services); and Form RFD-01 with Statement 3/3A for ITC refund claims.
With IGST payment: Tax invoice with IGST charged; GSTR-1 Table 6A with complete shipping bill number, date, and 6-digit port code; GSTR-3B with IGST in Table 3.1(b) ≥ Table 6A amount; shipping bill filed with customs; EGM filed by carrier; and GSTR-3B for the relevant period. No separate RFD-01 is required for goods — the shipping bill serves as the deemed refund application.
Export of services must meet all five conditions under Section 2(6) IGST Act: supplier located in India, recipient located outside India, place of supply outside India, payment received in convertible foreign exchange (or INR via Special Vostro Account where RBI permits), and supplier and recipient are not establishments of a distinct person.
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Time limits remain strict: goods must be exported within 3 months of the invoice date; service payments must be received within 1 year of the invoice date. Foreign exchange must be realised within 9 months of the export date per FEMA regulations (extendable up to 15 months for exporters with a good track record, with AD bank approval). Non-realisation Rule 96B — IGST refund must be repaid with interest within 30 days.
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Table of Contents
India's GST landscape for exporters has undergone its most significant transformation since 2017. The 56th GST Council Meeting (September 2025) launched "GST 2.0" — a sweeping rate restructuring that collapsed four slabs into three, while Budget 2026 formally deleted Section 13(8)(b) of the IGST Act, finally enabling intermediary service exporters to claim zero-rated benefits. Alongside these structural shifts, a new risk-based 90% provisional refund mechanism became operational in November 2025, reducing average refund processing times for compliant exporters from 45 days to roughly 7 days. This GST export compliance checklist for FY2026-27 covers every critical compliance requirement, common mistakes, and recent rule changes that Indian exporters need to know — updated April 2026.
GST 2.0 Explained: What the 56th GST Council Changed for Exporters in 2025
For Indian exporters, GST 2.0 — as the 56th Council's changes are now widely called — represents the most consequential shift since the tax's 2017 launch. Two core rate slabs now apply — 5% (merit/essentials) and 18% (standard) — plus a new 40% slab for sin and luxury goods. The 12% and 28% slabs were abolished, effective September 22, 2025, with ~90% of items from the 28% slab moved to the 18% slab and ~99% of items from the 12% slab moved to the 5% slab. These changes were formalised via Notification Nos. 09/2025 to 17/2025 – Central Tax (Rate), all dated September 17, 2025.
For exporters, this rate simplification corrected longstanding inverted duty structures in textiles, footwear, fertilisers, paper, and packaging — sectors where input tax rates exceeded output rates, trapping ITC. Exporters in these sectors should see improved ITC refund calculations under Rule 89(4).
Budget 2026 (February 1, 2026) formalised several additional 56th Council recommendations through the Finance Bill, 2026:
- Section 13(8)(b) of the IGST Act formally omitted — intermediary services (IT, BPO, consulting, brokerage, GCC operations) to overseas clients now follow the default place-of-supply rule (recipient's location), making them zero-rated exports with full ITC refund eligibility. This is expected to resolve a large backlog of pending show-cause notices running into thousands of crores.
- Finance Bill 2026 proposes to amend Section 54(6) — extending 90% provisional refund scope to inverted duty structure (IDS) cases, not just zero-rated supplies. Exporters should verify the operative notification before relying on this in a refund claim.
- Finance Bill 2026 proposes to amend Section 54(14) — removing the ₹1,000 minimum refund threshold for IGST-paid export refunds, which would benefit small and e-commerce exporters with high-volume, low-value shipments. Confirm operative notification before filing.
- Finance Bill 2026 proposes to amend Section 15(3) — post-sale discounts would no longer require a pre-existing agreement; only credit note issuance and ITC reversal by the recipient would be needed. Check the Finance Act gazette before updating your discount policy.
The 55th GST Council Meeting (December 21, 2024) had earlier reduced the compensation cess on supplies to merchant exporters to 0.1%, bringing it in line with the GST rate. It also made the Input Service Distributor (ISD) mechanism mandatory from April 1, 2025 — entities receiving common input service invoices for multiple GSTINs must now register as ISD and file Form GSTR-6 monthly.
LUT Filing for FY 2026-27: Deadline, Rules and What Happens If You Miss It
The Letter of Undertaking (LUT) allows exporters to make zero-rated supplies without paying IGST upfront, thereby avoiding a 2–6-month blockage of working capital. Filed electronically via Form GST RFD-11 under Rule 96A of the CGST Rules, the LUT is governed by Notification No. 37/2017-CT and Circular No. 8/8/2017-GST.
For a walkthrough of the portal process, see our step-by-step LUT filing guide.
Key deadlines and rules for LUT filing FY2026-27 — and what's changed since last year:
| Parameter | Detail |
|---|---|
| FY 2026-27 LUT status | Deadline was March 31, 2026 — if unfiled, file immediately. IGST applies at 18% p.a. on all FY2026-27 exports made without a valid LUT in place. LUT validity: April 1, 2026 to March 31, 2027. |
| Validity | One financial year (April 1 to March 31) |
| Eligibility | All GST-registered exporters NOT prosecuted for tax evasion exceeding ₹2.5 crore |
| Filing fee | None |
| Deemed acceptance | If not accepted within 3 working days |
| Witnesses required | Two independent witnesses with name, occupation, and address |
Failing to renew the LUT annually is the single most common and expensive compliance mistake exporters make. The LUT expires every March 31, and exports made before a valid LUT is filed are liable to IGST at the applicable rate plus interest at 18% per annum from the invoice date. There is no retroactive saving — filing the LUT after exports have already been made does not cure the deficiency (though Circular 37/11/2018-GST provides some relief where exports are substantively established).
When the LUT is revoked: If goods are not exported within 3 months of the invoice date (or the service payment is not received within 1 year), the LUT facility is deemed withdrawn. During withdrawal, exports must be made on payment of IGST or under a bank guarantee. LUT is restored immediately upon paying the amount due (tax + interest).
Bond/Bank Guarantee requirements remain unchanged: exporters prosecuted for tax evasion exceeding ₹2.5 crore must furnish a bond (on non-judicial stamp paper) with a bank guarantee typically not exceeding 15% of the bond amount. Running bonds are permitted. The Commissioner may waive the bank guarantee based on the exporter's track record. In practice, the LUT route dominates — bonds are increasingly rare.
The 12 most common GST mistakes Indian exporters make
Avoid all of these with our step-by-step LUT filing guide for FY2026-27 — then come back to this checklist to verify the rest.
Invoice number mismatch (Error SB005) is the most frequent — and often irrecoverable — mistake. When the invoice number in GSTR-1 Table 6A doesn't match the shipping bill filed with customs, the IGST refund is automatically rejected. Since shipping bills cannot be amended after EGM filing, SB005 errors require special intervention through customs authorities. The same GST-compliant export invoice must be used in both the customs and GST systems.
Beyond SB005, the critical mistakes cluster around six areas:
LUT and timing errors: Not renewing LUT annually before March 31; filing LUT after the first export invoice of the FY (requiring IGST payment on all prior exports); not exporting goods within the 3-month window from invoice date, triggering IGST liability plus 18% interest.
GSTR-1 and GSTR-3B mismatches: Reporting exports as normal sales in GSTR-3B Table 3.1(a) instead of 3.1(b); IGST amount in Table 3.1(b) being less than the total in GSTR-1 Table 6A (which blocks data transmission to ICEGATE entirely); omitting shipping bill number, date, or 6-digit port code from Table 6A; and reporting export invoices in the wrong return period.
E-invoicing failures: Not generating e-invoices for export transactions when turnover exceeds ₹5 crore AATO; missing the 30-day reporting window (now mandatory for AATO ≥ ₹10 crore from April 1, 2025 — IRP rejects late invoices); using incorrect supply type codes (must use EXPWP or EXPWOP); and setting the recipient PIN code incorrectly (must be 999999 for exports).
ITC classification errors: Treating exports as "exempt" instead of "zero-rated" — a distinction that determines whether full ITC can be claimed. Zero-rated supplies allow complete ITC; exempt supplies do not. Exporters also commonly include blocked credits under Section 17(5) (motor vehicles, food, club memberships) in their refund calculations.
HSN code mistakes: Using 4-digit HSN codes when 8-digit codes are mandatory for all export invoices, regardless of turnover. In 2025, the portal phased out manual HSN entry in GSTR-1 — codes must now be selected from a mandatory dropdown. Wrong HSN codes trigger IRP Error 2176, block e-invoice generation, and can lead to customs classification disputes.
FOB value discrepancies: If the FOB value on the shipping bill differs materially from the taxable value in GSTR-1, it can trigger refund rejection; in practice, only the lower of the two values is typically sanctioned per Circular 37/11/2018-GST. A 2% tolerance is widely cited in practitioner guidance, though this is not explicitly codified in the circular text.
GST Export Refund: IGST Refund vs ITC Refund Routes and 90% Provisional Mechanism
Exporters have two paths to recover GST on exports, both of which have been significantly improved by the November 2025 risk-based IGST refund provisional mechanism.
Route 1 — IGST refund via shipping bill (Rule 96): The shipping bill itself is the deemed refund application. No separate RFD-01 is needed for goods. ICEGATE auto-matches GSTR-1 Table 6A data with shipping bill and EGM records. When everything validates (code SB000), the refund is processed automatically. From November 2025, compliant exporters receive a 90% provisional refund within approximately 7 days; the balance is issued within 60 days. For service exports with IGST payment, a separate Form RFD-01 with Statement 2 is still required.
Route 2 — ITC refund under LUT/Bond (Rule 89): Exporters who ship without paying IGST claim refund of accumulated ITC via Form GST RFD-01 with Statement 3 (invoice details) and Statement 3A (computation). The refund formula under Rule 89(4) is: Refund = (Zero-rated supply turnover × Net ITC) ÷ Adjusted Total Turnover. Net ITC excludes ITC on capital goods. From 2025, refund filing shifted from tax-period-based to invoice-based filing — exporters enter invoice-level details directly, and invoices used in one application are locked from reuse.
Key refund timelines remain strict:
| Timeline | Period | Reference |
|---|---|---|
| Filing deadline | 2 years from relevant date | Section 54(1) CGST Act |
| Relevant date (goods) | Date ship/aircraft leaves India | Explanation (2)(a) to Section 54 |
| Relevant date (services) | Date of payment receipt in foreign exchange or invoice date, whichever later | Explanation (2)(b) to Section 54 |
| Provisional refund | 90% within 7 days of acknowledgment | Section 54(6), Rule 91 |
| Final refund order | Within 60 days of filing | Section 54(7) |
| Interest on delay | 6% p.a. from 61st day | Section 56 CGST Act |
| Interest (appellate order) | 9% p.a. if not paid within 60 days of appellate order | Proviso to Section 56 |
Top refund rejection reasons in order of frequency: (1) SB005 invoice number mismatch, (2) EGM not filed by carrier (SB002/SB006), (3) GSTIN mismatch between shipping bill and returns (SB003), (4) GSTR-3B Table 3.1(b) amount less than GSTR-1 Table 6A, (5) FOB value mismatch exceeding 2%, and (6) non-realisation of foreign exchange within FEMA-prescribed 9 months (triggering Rule 96B repayment obligation within 30 days).
Deficiency memos (Form RFD-03) carry a strict 15-day response window — failure results in the application being treated as withdrawn, requiring a fresh filing. However, the deficiency memo period is excluded from the 2-year limitation per Notification No. 15/2021-CT.
E-invoicing, HSN codes, and GSTR filing changes in 2025-2026
The e-invoicing threshold remains at ₹5 crore AATO as of February 2026 (per Notification 10/2023-CT, effective August 1, 2023). The major confirmed change is the 30-day reporting time limit — from April 1, 2025, businesses with AATO ≥ ₹10 crore must upload e-invoices to IRP within 30 days of invoice date; the IRP rejects late submissions and denies IRN generation. Two-factor authentication (2FA) also became mandatory for all e-invoice and e-way bill generation from April 1, 2025. Non-compliance with e-invoicing carries penalties of 100% of tax due or ₹10,000 per invoice, whichever is higher.
HSN code requirements are now strictly enforced. For exports, 8-digit HSN codes are mandatory regardless of turnover. For domestic B2B supplies, businesses with an AATO above ₹5 crore require 6-digit codes, while those below require 4-digit codes. From 2025 (Phase 3 HSN reporting), manual HSN entries in GSTR-1 have been replaced by a mandatory dropdown selection, with descriptions auto-populated from the master database. Table 12 of GSTR-1/1A has been bifurcated into B2B and B2C sections, and Table 13 (document details) is now mandatory for all taxpayers.
GSTR-1 and GSTR-3B filing for exporters requires careful attention to table placement: export invoices with IGST go in Table 6A, exports under LUT go in Table 6B, and SEZ supplies go in Table 6B as well. In GSTR-3B, all zero-rated supplies must appear in Table 3.1(b) — not Table 3.1(a). The IGST amount in GSTR-3B Table 3.1(b) must equal or exceed the total from GSTR-1 Tables 6A + 6B, or invoices will not transmit to ICEGATE. The amendment deadline for GSTR-1 corrections is November 30 of the following financial year or the annual return filing date, whichever is earlier.
ITC reconciliation has become more demanding since the Invoice Management System (IMS) was rolled out in late 2024. Recipients must actively accept, reject, or keep pending supplier invoices. From 2025, unaccepted invoices under IMS are automatically accepted and flow to GSTR-2B — check the latest GSTN advisory for the exact go-live date applicable to your turnover slab. A three-way reconciliation — IMS vs. GSTR-2B vs. GSTR-3B — is now the compliance standard.
Critically, zero-rated supplies (exports) are not treated as exempt for ITC reversal under Rules 42 and 43 — no reversal is required for the portion attributable to exports.
RoDTEP Scheme 2026: Rates, ARR Deadline and Budget Allocation Cut Explained
The RoDTEP scheme ran through March 31, 2026 per DGFT Notification No. 35/2025. For FY2026-27, the Union Budget allocated ₹10,000 crore — exporters should confirm the formal extension notification on the DGFT portal before filing ARR or claiming benefits for shipments from April 1, 2026 onwards. Current rates range from 0.3% to 4.3% of FOB value across 10,780+ HS lines for DTA exports. The scheme reimburses embedded non-GST taxes (electricity duty, VAT on fuel, mandi tax, stamp duty, toll charges) that are not covered by the GST ITC mechanism.
Exporters can claim both RoDTEP and IGST refund simultaneously — there is no conflict, as the two schemes cover different tax components. RoDTEP credits are issued as transferable e-scrips via ICEGAT and are usable only for paying Basic Customs Duty on imports. They are not subject to GST themselves and cannot be used for GST payment.
For eligibility criteria and claiming steps, read our complete RoDTEP claiming process.
The most significant development is a roughly 40–45% cut in FY2026-27 budget allocation — down to approximately ₹10,000 crore from the prior year's outlay. Exact figures are scattered across Union Budget expenditure statements; exporters should confirm allocations on the DGFT portal before projecting RoDTEP receivables. A Rate Review Committee was constituted in October 2025 (chaired by Neeraj Kumar Gupta) to rationalise the FY 2024-25 data. No formal multi-year extension has been announced beyond March 2026, though the budget allocation implies some continuation.
New compliance requirement — Annual RoDTEP Return (ARR): Exporters with total RoDTEP claims exceeding ₹1 crore in a financial year must file an ARR to demonstrate that the claimed taxes were actually incurred. The FY 2023-24 ARR deadline has been extended to March 31, 2026, with a composition fee of ₹ 15,000 (Public Notice No. 46/2025-2026). Non-filing leads to denial of benefits and scroll-out restrictions.
For RoSCTL (covering textile apparel and made-ups under HS Chapters 61, 62, 63), the same uncertainty applies — allocation has been substantially reduced for FY2026-27, though the exact notified figure should be verified on the DGFT portal.
GST Penalties for Exporters 2026: Late Fees, ITC Blocks and New Portal Rules
GST enforcement has materially tightened across several dimensions. Late fees remain at ₹50/day (₹25 CGST + ₹25 SGST) for regular GSTR-1/GSTR-3B returns, capped at ₹5,000 per return. Annual return (GSTR-9) late fees are ₹200/day, capped at 0.50% of annual turnover. Interest on late tax payment runs at 18% per annum; excess ITC claims attract 24% per annum.
Three enforcement changes particularly affect exporters. First, from late 2025, the GST portal has been restricting the filing of returns older than 3 years — ITC related to those periods risks permanent loss. Verify the exact cut-off applicable to your return type against the latest GSTN advisory. Second, from early 2026, hard portal validations block GSTR-3B filing when the claimed ITC exceeds the closing balance in the Electronic Credit Reversal and Reclaimed Statement — confirm the operative date against the GSTN portal advisory. Third, bank account details must be up to date on the portal — failure triggers automatic registration suspension, blocking return filing and e-way bill generation.
The GST Appellate Tribunal (GSTAT) launched on September 24, 2025 and began hearing appeals from December 2025. The deadline to file GSTAT appeals for orders communicated before April 1, 2026, has been extended to June 30, 2026 (S.O. 4220(E) dated September 17, 2025). This provides exporters a long-awaited appellate remedy below the High Court level.
Fraud and tax evasion penalties remain severe: 100% to 300% of tax evaded (minimum ₹10,000), with imprisonment ranging from 1 year (₹1–2 crore evasion) to 5 years (above ₹5 crore). The general penalty under Section 125 is capped at ₹25,000.
Zero-Rated Supply Documentation Checklist: What Indian Exporters Must Keep Ready
For exports to qualify as zero-rated supply under Section 16 of the IGST Act, Indian exporters must maintain precise documentation depending on their chosen route:
Under LUT (without IGST payment): Valid LUT (Form RFD-11) for the financial year; export invoices with GSTIN, invoice number, and 8-digit HSN/SAC codes; GSTR-1 Table 6B filed correctly; GSTR-3B filed for the period; shipping bill/BL/AWB; BRC/FIRC for foreign exchange receipt (services); and Form RFD-01 with Statement 3/3A for ITC refund claims.
With IGST payment: Tax invoice with IGST charged; GSTR-1 Table 6A with complete shipping bill number, date, and 6-digit port code; GSTR-3B with IGST in Table 3.1(b) ≥ Table 6A amount; shipping bill filed with customs; EGM filed by carrier; and GSTR-3B for the relevant period. No separate RFD-01 is required for goods — the shipping bill serves as the deemed refund application.
Export of services must meet all five conditions under Section 2(6) IGST Act: supplier located in India, recipient located outside India, place of supply outside India, payment received in convertible foreign exchange (or INR via Special Vostro Account where RBI permits), and supplier and recipient are not establishments of a distinct person.
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Time limits remain strict: goods must be exported within 3 months of the invoice date; service payments must be received within 1 year of the invoice date. Foreign exchange must be realised within 9 months of the export date per FEMA regulations (extendable up to 15 months for exporters with a good track record, with AD bank approval). Non-realisation Rule 96B — IGST refund must be repaid with interest within 30 days.
Disclaimer: The information provided in this blog is for general informational purposes only and does not constitute financial or legal advice. Winvesta makes no representations or warranties about the accuracy or suitability of the content and recommends consulting a professional before making any financial decisions.
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