Export Invoice Under GST: LUT, Zero Rating and the Endorsement You Must Carry

Zero-rated is not exempt

Section 16 of the IGST Act makes exports and supplies to SEZ units and developers zero-rated. Section 17(2) of the CGST Act blocks credit attributable to exempt supplies, but Section 16(2) of the IGST Act expressly preserves credit for zero-rated supplies even though no tax is charged.

That single provision is what makes exporting viable: you recover the GST embedded in your inputs rather than absorbing it.

The two routes

1. Under a Letter of Undertaking: you export without paying integrated tax, and claim a refund of the unutilised input tax credit. An LUT is filed in Form GST RFD-11 and is valid for one financial year, so it must be renewed each April.

2. On payment of integrated tax: you charge IGST on the export invoice, pay it, and claim a refund of the tax paid. The shipping bill itself functions as the refund application for goods, which makes this route administratively simpler though it blocks working capital.

Most regular exporters use the LUT route. The payment route suits businesses with a large accumulated credit balance they would rather convert to cash.

The endorsement the invoice must carry

Rule 46 requires an export invoice to carry an endorsement stating either SUPPLY MEANT FOR EXPORT ON PAYMENT OF INTEGRATED TAX or SUPPLY MEANT FOR EXPORT UNDER BOND OR LETTER OF UNDERTAKING WITHOUT PAYMENT OF INTEGRATED TAX, as applicable.

The same invoice must also carry the recipient's name and address, the delivery address, the destination country, and the number and date of the application for removal of goods for export where applicable. The recipient GSTIN field is left blank, because an overseas buyer has none.

Supplies to SEZ follow the same logic

A supply to an SEZ unit or developer is zero-rated in the same way, with the same two routes and the same endorsement requirement. The practical difference is that the recipient does have a GSTIN, so it is reported as a B2B supply in GSTR-1 under the SEZ category rather than as an export.

Note the asymmetry: an SEZ unit is exempt from issuing e-invoices as a supplier, but a normal taxpayer supplying an SEZ must issue one.

Realisation and the refund clock

For services, foreign exchange must be realised within the period allowed under FEMA — generally nine months — or the supply ceases to qualify as an export and the tax becomes payable with interest. For goods, the shipping bill and the export general manifest evidence the export.

Refund applications are filed within two years of the relevant date. Where the export was under LUT, the refund of unutilised credit is claimed in Form GST RFD-01; where tax was paid, the refund for goods is processed automatically against the shipping bill.

Frequently asked questions

### Do I charge GST on an export invoice?

Only if you choose the payment route. Under a Letter of Undertaking you export without paying integrated tax and later claim a refund of unutilised input credit. If you do not hold a valid LUT, you must charge and pay IGST and claim a refund of the tax paid.

### Is an LUT required every year?

Yes. A Letter of Undertaking in Form GST RFD-11 is valid for one financial year and must be filed afresh each year. Exporting under an expired LUT means the supply is treated as made on payment of tax, and the IGST becomes payable with interest.

### What is the difference between zero-rated and exempt?

Both mean no tax is charged on the outward supply, but only zero-rating preserves input tax credit. An exempt supply blocks the credit on the inputs used to make it, so the embedded GST becomes a cost. Exports and SEZ supplies are zero-rated precisely so that Indian goods and services do not export domestic taxes.

### Does e-invoicing apply to exports?

Yes, if you are above the five crore rupee threshold. Exports, deemed exports and SEZ supplies all require an IRN. The export invoice is reported to the Invoice Registration Portal in the same way as a domestic B2B invoice, with the export-specific fields populated.