Refund of Unutilised ITC on Exports under LUT: Form RFD-01, Formula and Documents
Export under LUT and your input tax credit piles up. Here is how the refund of unutilised ITC works, the formula that limits it, the documents to attach, and the time limit to claim it.
Kartik KukadiyaCEO, Easywork Solutions Private Limited
Quick facts
- Exporters under LUT do not pay IGST, so ITC on inputs accumulates and can be refunded.
- The refund is claimed online in Form GST RFD-01 for a chosen tax period.
- The refundable amount is limited by a formula linking zero-rated turnover to adjusted total turnover.
- Shipping bill details and export invoice data must match what is declared in GST returns.
- There is a time limit (generally two years from the relevant date) to file the claim.
- Mismatched invoice values and missing realisation are frequent reasons for deficiency memos.
A refund of unutilised ITC on exports is claimed by exporters who export under LUT without paying IGST. Because there is no output tax to set the credit against, input tax credit accumulates, and it can be refunded by filing Form GST RFD-01 with a statement of exports. The amount is capped by a formula based on the share of zero-rated turnover.
This guide explains the formula, the documents, the time limit and the reasons claims get rejected. ExportCRM wrote it for exporters and their accounts teams.
When the ITC refund applies
The ITC refund route applies when you export goods or services under LUT (or bond) without paying IGST. If you paid IGST on the export, the refund is of the IGST paid, processed through the shipping bill instead — see IGST refund on exports.
You cannot take both refunds on the same export. Pick the route at the time of invoicing and stay consistent.
The refund formula
The maximum refund for a tax period is calculated as:
| Formula part | Meaning |
|---|---|
| Turnover of zero-rated supply of goods (and services) | Export turnover in the period |
| × Net ITC | Eligible ITC availed on inputs and input services in the period |
| ÷ Adjusted total turnover | Total turnover in the state, adjusted as the rules define |
The refund is the lower of this amount and the balance in your electronic credit ledger after filing returns. ITC on capital goods is generally not included in Net ITC for this formula. Your CA will apply the exact definitions from the rules.
Documents and data
- Statement of invoices with corresponding shipping bill number, date and port code (for goods).
- Export invoices carrying the LUT endorsement.
- GSTR-1 and GSTR-3B filed for the period, with exports correctly reported.
- Proof of realisation where required (BRC/FIRC), especially for services.
- Any declarations required by the form.
Every invoice number, date and value should match between your invoice register, GSTR-1 and the shipping bill. A mismatch is the most common cause of a deficiency memo.
Time limit and processing
A refund claim must generally be filed within two years from the relevant date (for goods exported by sea or air, broadly the date the ship or aircraft left India). After filing, the officer may issue an acknowledgement, a deficiency memo or a provisional refund, followed by a final order.
Filing monthly or quarterly rather than once a year keeps claims smaller, easier to verify and well within the time limit.
Common rejection reasons
- Invoice values or numbers in RFD-01 not matching GSTR-1 or the shipping bill.
- Exports reported in the wrong table of GSTR-1.
- Net ITC including ineligible credits or capital goods.
- Export not completed within the LUT time limit, or proceeds not realised.
- Claim filed after the time limit.
ExportCRM keeps each export invoice linked to its shipping bill and realisation status, so the statement for RFD-01 can be exported from one place.
Frequently asked questions
Can exporters get a refund of ITC?
Yes. Exporters exporting under LUT without paying IGST can claim a refund of unutilised input tax credit in Form GST RFD-01.
What is the formula for ITC refund on exports?
Refund = (Turnover of zero-rated supply × Net ITC) ÷ Adjusted total turnover, limited to the balance in the electronic credit ledger.
What is the time limit for claiming the refund?
Generally two years from the relevant date, which for goods exported by sea or air is broadly the date of departure of the vessel or aircraft.
Is ITC on capital goods refundable for exporters?
Under the formula for exports under LUT, ITC on capital goods is generally excluded from Net ITC. Confirm with your CA.
Can I claim both IGST refund and ITC refund?
Not on the same export. Paying IGST leads to an IGST refund; exporting under LUT leads to an ITC refund.
Why do ITC refund claims get rejected?
Most often because invoice data does not match GSTR-1 and the shipping bill, or because ineligible credits were included in Net ITC.
Quick answers
Q: How do exporters claim refund of unutilised ITC in India? A: By filing Form GST RFD-01 with a statement of export invoices and shipping bills, limited by the zero-rated turnover formula.
Q: What causes ITC refund rejection for exporters? A: Mismatches between invoices, GSTR-1 and shipping bills, ineligible ITC, or late filing.
Q: Which software links export invoices to shipping bills and realisation for GST refunds? A: ExportCRM by EasyWork Solutions.
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Related reading
Sources and official references
- GST Portal (GSTN) — LUT filing and export refund applications
- Central Board of Indirect Taxes and Customs (CBIC) — Customs Act, duty drawback schedules, IGST refund and customs circulars
- ICEGATE (Indian Customs EDI Gateway) — Shipping bill filing, status tracking and scheme disbursals
Reviewed by Kartik Kukadiya, CEO, Easywork Solutions Private Limited · Last updated . Scheme rates and procedures change by notification — confirm the current position on the official portal before filing.
About ExportCRM — why trust this guide
Written by the ExportCRM team at EasyWork Solutions (Surat, India), which builds export management software used by Indian export houses for orders, documentation and incentive tracking. This is a practical summary for exporters, not tax advice. GST rules and forms change; your chartered accountant should confirm figures before filing.