Export Business Compliance: IEC Registration, GST LUT Filing & Zero-Rated Tax Refund Guide

Exporters of agricultural produce (non-basmati rice, forest produce), minerals, manufactured steel goods, and IT services across Raipur, Bhilai, Sambalpur, and Kalahandi operate within a highly rewarding global market.

However, navigating Directorate General of Foreign Trade (DGFT) compliance and claiming legitimate GST refunds on zero-rated exports requires strict adherence to statutory filing procedures.

Mandatory DGFT Mandate: Every active Import Export Code (IEC) holder must electronically update their IEC profile on the DGFT portal annually between April and June. Failure to update results in automatic deactivation of the IEC, halting all customs import/export clearances.

1. Statutory Prerequisite: Import Export Code (IEC) Registration

The 10-digit Import Export Code (IEC) issued by the DGFT is mandatory for any business importing or exporting goods or specified services from India:

2. Zero-Rated Supply Framework under Section 16 of IGST Act

Under Section 16 of the Integrated Goods and Services Tax (IGST) Act, 2017, export of goods or services is classified as a "Zero-Rated Supply". Exporters have two distinct operational routes to execute zero-rated exports:

Route A: Export Under LUT (Without IGST Payment) ➔ Claim Refund of Accumulated Input Tax Credit (ITC)
OR
Route B: Export With IGST Payment ➔ Claim Automatic IGST Refund from Customs (ICEGATE)

Route A: Export under Letter of Undertaking (LUT) — Recommended

• The exporter files an online Letter of Undertaking (Form GST RFD-11) on the GST portal before executing export shipments.
• Goods/services are exported without paying any IGST.
• The exporter then files Form GST RFD-01 to claim a cash refund of unutilized Input Tax Credit (accumulated on raw materials, packaging, and input services).

Route B: Export on Payment of IGST

• The exporter pays IGST at applicable rates at the time of export using cash or available ITC.
• After shipping, the shipping bill filed with customs acts as a refund application. Customs (ICEGATE) processes an automatic refund into the exporter's bank account.

3. How to File Form GST LUT (RFD-11)

The Letter of Undertaking must be filed online for every financial year before making any export supplies:

1. Log into the GST Portal (gst.gov.in).
2. Navigate to Services ➔ User Services ➔ Furnish Letter of Undertaking (LUT).
3. Select the relevant Financial Year (e.g., 2026-27).
4. Upload details of two independent witnesses.
5. Sign electronically using Digital Signature Certificate (DSC) or Electronic Verification Code (EVC).

Crucial Requirement: The exporter must realize export proceeds in convertible foreign exchange (or INR where permitted by RBI) within 9 months from the date of export invoice, failing which IGST along with 18% interest must be paid.

4. Calculating Accumulated ITC Refund: Formula under Rule 89(4)

When claiming an unutilized ITC refund under Route A (Export under LUT), the maximum refund amount is calculated using the formula prescribed in Rule 89(4) of the CGST Rules:

$$\text{Maximum Refund Amount} = \frac{\text{Turnover of Zero-Rated Supply of Goods/Services}}{\text{Adjusted Total Turnover}} \times \text{Net Input Tax Credit}$$

Where:

• Net ITC: Input tax credit availed on inputs and input services during the relevant period (capital goods ITC excluded).
• Zero-Rated Turnover: Value of zero-rated supplies executed under LUT during the period.

5. Case Study: Non-Basmati Rice Exporter in Kalahandi

A rice processing enterprise in Jayapatna, Kalahandi exported custom-milled rice shipments to West African ports valued at Rs. 4.50 Crores under LUT.

Challenge: The unit accumulated Rs. 28 Lakhs of unutilized GST Input Tax Credit paid on packaging materials, bags, electricity duty GST components, and freight services.

Resolution: Our EXIM tax team filed Form GST RFD-01 on the GST portal along with Bank Realization Certificates (BRC/FIRC) and shipping bill reconciliations, securing a full cash refund credit of Rs. 28 Lakhs directly into the client's bank account within 35 days.

End-to-End Export Advisory & GST Refund Services

Our specialized EXIM practice at Rabi Agrawal & Associates provides DGFT IEC registrations, annual IEC updates, Form GST RFD-11 LUT filings, Form GST RFD-01 accumulated ITC refund claims, and Customs ICEGATE discrepancy resolutions for exporters across Raipur, Bhilai, Kalahandi, and Sambalpur.

Consult our export advisory team at Raipur Head Office or Jayapatna Branch.