The container has shipped, the buyer has paid, and your IGST or accumulated ITC is still sitting with the government. For goods exporters, the refund process is more mechanical than for services — it runs through shipping bills, EGMs, and customs data matching, which means one wrong field can hold up money that should've moved automatically. Knowing the procedure precisely is what gets your refund processed in weeks instead of months.

Two Procedures, Not One

The route you choose for exporting goods decides which procedure you follow for the refund.

Practical implication: The IGST-paid route is procedurally lighter for goods because customs and GSTN exchange data directly — you're not filing a separate refund application at all. The LUT route gives you better cash flow during the year but requires you to actively file and track RFD-01 for every claim.

Procedure A: Goods Exported With Payment of IGST

This is the closest GST gets to an automatic refund, but only if four things line up:

1. File your GSTR-1 with correct shipping bill number, shipping bill date, and port code in Table 6A.
2. File your GSTR-3B for the same period, with the IGST paid on exports correctly declared and matching GSTR-1.
3. Customs files the EGM (Export General Manifest) — this confirms the goods actually left the country. Without EGM filing, the refund process doesn't activate at all, regardless of how correctly you've filed your returns.
4. ICEGATE and GSTN systems match the shipping bill, invoice, and return data automatically. If everything matches, the refund moves to your registered bank account without you filing RFD-01.

Practical implication: Your refund here depends entirely on data accuracy at the point of export — get the shipping bill number or invoice value wrong on GSTR-1, and the system will reject the match even though the goods genuinely left the country and tax was genuinely paid.

Procedure B: Goods Exported Under LUT (Refund of Unutilised ITC)

This route needs an active filing on your part, in this order:

1. File LUT in Form RFD-11 on the GST portal before raising any export invoice — this must be done fresh each financial year; last year's LUT does not carry forward.
2. Accumulate and track ITC on inputs and input services used for the exported goods through the relevant period.
3. File Form GST RFD-01 online, selecting the correct refund category for export of goods without payment of tax, along with Statement 3A computing the refund under Rule 89(4).
4. Upload supporting documents — shipping bill, EGM, GSTR-2A/2B reconciliation, and a CA certificate if the claim exceeds ₹2 lakh (self-declaration suffices below that).
5. Submit using DSC or EVC to generate your Application Reference Number (ARN), which tracks the claim through processing.

Practical implication: Because this route depends on you initiating and documenting the claim, the procedural discipline is on your side — incomplete Statement 3A figures or a mismatched LUT period are the most common reasons these claims stall before an officer even reviews the merits.

How the Refund Amount Is Computed for Goods

For the LUT route, the refund of accumulated ITC follows a fixed formula under Rule 89(4):

Refund Amount = (Turnover of zero-rated supply of goods × Net ITC) ÷ Adjusted Total Turnover

For goods specifically, your zero-rated turnover is capped at the lower of the actual export value or 1.5 times the value of the same goods sold domestically by you or a comparable supplier. This cap exists to prevent inflated export invoicing from generating disproportionate refunds.

Practical implication: If you export a product with no domestic equivalent, document your basis for the declared value before filing — officers routinely query this gap, and an undocumented position invites a deficiency memo rather than a quick clearance.

Timelines, Interest, and Where Claims Get Stuck

File within two years from the relevant date — for goods exported with payment of tax, that's the shipping bill date; for LUT exports, it's the date foreign exchange is received. A provisional refund of 90% is meant to be released within seven days for export claims, with interest at 6% per annum if the department exceeds 60 days on a complete application.

Most rejections trace back to the same procedural gaps: EGM not filed by the carrier, invoice or shipping bill numbers not matching across GSTR-1 and customs records, or an invalid GSTN reference on the shipping bill. A Deficiency Memo (Form RFD-03) closes your original application outright — it has to be refiled fresh, not corrected.

One change to watch: the Finance Act, 2026 amends Section 54(14) to remove the ₹1,000 minimum refund threshold specifically for goods exported with payment of tax. This is set to take effect from a date the government will notify separately — it isn't operative yet, so continue applying the existing threshold until that notification is issued.

The One Thing to Get Right Before You Ship

Whichever route you use, the procedure lives or dies on whether your shipping bill, invoice, and GST returns describe the same transaction in the same numbers. Reconcile these before filing your monthly return, not after a refund gets stuck — that single habit prevents most of the delays exporters run into.

CA Praneeth Thunuguntla | Thunuguntla & Associates | Income Tax & GST Advisory