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CA Final · Indirect Tax Laws

Import and Export Under GST for CA Final Indirect Tax

Import and export under GST deal with cross-border supplies under the IGST Act. Imports are inter-State supplies bearing IGST. Exports and supplies to SEZ are zero-rated: supply under LUT without paying IGST and claim refund of unutilised ITC, or pay IGST and claim refund of it. Deemed exports (Section 147, CGST Act) are notified supplies, not zero-rated.

What this chapter covers

This chapter covers how GST treats supplies that cross India's border. It starts with imports of goods and services, which are treated as inter-State supplies and bear IGST. It then moves to exports and supplies to Special Economic Zones, which are zero-rated under the IGST Act. Zero-rating means the supplier can recover the tax on inputs, so exported supplies leave India without a tax cost.

The chapter has a clear sequence. You first learn what counts as an import or export, including the place of supply and the conditions for exports of services. You then learn the two ways to export: without payment of tax under a Letter of Undertaking (LUT) or bond, or with payment of IGST. Finally you learn how refunds work for each route, and how SEZ supplies and deemed exports differ.

Keep one distinction clear. Exports and supplies to an SEZ developer or unit are zero-rated. Deemed exports are not zero-rated. Under Section 147 of the CGST Act they are notified supplies of goods, and the tax paid on them is claimed as a refund under Section 54 read with Rule 89(2), by the recipient or the supplier as notified.

The chapter connects to many other parts of Paper 5. It depends on the levy and charge provisions, place of supply, time of supply, value of supply, input tax credit, and the refund provisions. It also links to Customs in Part II, because import of goods attracts both Customs duty and IGST, and the Foreign Trade Policy covers export promotion. Treat it as a chapter that tests how well you have joined the other GST topics together.

This chapter is a favourite for case-scenario MCQs and for short written answers, because one fact pattern can test place of supply, zero-rating conditions, LUT rules and refund computation together. The conditions are specific, so students who know them exactly score well and those who rely on general ideas lose marks. It also feeds into Paper 6, where an export or SEZ angle often appears inside a larger case study. Careful effort here pays off across several parts of the paper.

Import and Export Under GST: topics in the order to study them

  1. 1Import of Goods and Services under GSTStart here because it sets the base idea that imports are inter-State supplies bearing IGST, and it links to place of supply and Customs.
  2. 2Export of Goods and Services as Zero-Rated SupplyNext, learn what an export is and the conditions for services, since every later topic builds on the zero-rated supply concept.
  3. 3Export under Bond or Letter of Undertaking (Rule 96A)Once you know what a zero-rated supply is, study the route of exporting without paying IGST and the conditions attached to it.
  4. 4Refund of IGST Paid on Exports and Unutilised ITCRefunds are the consequence of the two export routes, so they come after you understand both and are best learned with the formula and practice.
  5. 5Special Economic Zones and Deemed ExportsStudy this last because supplies to SEZs are zero-rated like exports, while deemed exports are not zero-rated. They are taxable supplies with their own refund provisions, and you need the earlier ideas to compare them.

How to prepare Import and Export Under GST

This chapter rewards a structured, condition-by-condition method. Build one clear flow from classification to refund, and practise it on short cases.

  1. Read the definitions first: import, export, zero-rated supply, SEZ unit and developer. Write each in your own words.
  2. For each topic, make a short list of conditions that must all be met. A supply that misses one condition may not qualify.
  3. Draw one flow chart: classify the supply, choose the route (LUT or pay IGST), then identify the refund claim.
  4. Revise the refund formula for unutilised ITC on zero-rated supplies and practise computing it step by step with clear working.
  5. Compare exports, supplies to SEZ and deemed exports in a side-by-side note. Mark clearly that deemed exports are not zero-rated, so you do not mix up their treatment.
  6. Solve short case scenarios from past papers and ICAI practice material, and answer in provision, facts, conclusion form.
  7. Keep a one-page note of time limits, documents and forms. Read the official text for the exact wording before the exam.

Common mistakes in Import and Export Under GST

  • Treating every supply to a foreign customer as an export of services.

    Fix: Check every condition one by one, including supplier location, recipient location, place of supply and payment, before you conclude.

  • Mixing up the LUT route with the route of paying IGST and claiming a refund.

    Fix: Remember that under LUT or bond no IGST is paid and the refund is of unutilised ITC, which does not cover ITC on capital goods (Section 54(3) of the CGST Act). Paying IGST leads to a refund of the IGST paid. If you pay IGST, the ITC is used to pay it, so the refund of IGST paid is the only route for that supply.

  • Applying the refund formula with wrong inputs or ignoring its restrictions.

    Fix: Define each term in your notes, practise numerical cases, and show working in clear steps.

  • Confusing supplies to an SEZ with deemed exports, or calling deemed exports zero-rated.

    Fix: Keep a comparison note. Supplies to an SEZ developer or unit are zero-rated. Deemed exports are notified supplies of goods, are taxable, and have a separate refund claim by the recipient or supplier.

  • Forgetting that imports of goods bear Customs duty as well as IGST.

    Fix: In every import case, list Customs duty and IGST separately, and note the value on which each is computed.

  • Writing general answers without naming the rule or its conditions.

    Fix: State the provision in plain words, apply it to the facts, and end with a clear conclusion.

Last-day revision: Import and Export Under GST

  • Import of goods or services into India is treated as an inter-State supply, and IGST is levied on it.
  • Export and supply to an SEZ developer or unit are zero-rated supplies under the IGST Act.
  • A zero-rated supply can be made under LUT or bond without paying IGST, or with payment of IGST followed by a refund claim.
  • A registered person who intends to supply goods or services as zero-rated without payment of IGST may furnish an LUT. The exception is a person who has been prosecuted for an offence under the CGST Act, the IGST Act or any other law involving tax evasion of ₹250 lakh or more, where the prosecution has been launched. That person furnishes a bond with a bank guarantee.
  • Export of services needs all five conditions: the supplier is in India; the recipient is outside India; the place of supply is outside India; payment is received in convertible foreign exchange (or in Indian rupees where RBI permits); and the supplier and recipient are not merely establishments of a distinct person.
  • Place of supply decides whether a service is an export, so check it before concluding.
  • Exports with payment of IGST give a refund of the IGST paid. The ITC is used to pay that IGST, so the refund of IGST paid is the only route for that supply.
  • Exports without payment of tax (under LUT or bond) allow a refund of unutilised ITC on inputs and input services. Refund of unutilised ITC on capital goods is not allowed (Section 54(3) of the CGST Act).
  • The refund of unutilised ITC follows a prescribed formula, so apply it with the correct turnover and ITC figures.
  • Deemed exports under Section 147 of the CGST Act are notified supplies of goods that are treated as deemed exports even though the goods do not leave India. They are not zero-rated under the IGST Act.
  • Tax is paid on deemed exports. Refund of that tax is claimed under Section 54 of the CGST Act read with Rule 89(2), by the recipient or the supplier as notified.
  • Customs duty and IGST both apply on import of goods, so keep the two apart in any computation.

Import and Export Under GST practice questions

Import and Export Under GST in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Import and Export Under GST: frequently asked questions

Is import and export under GST important for CA Final Paper 5?

Yes. It is a practical chapter that combines place of supply, ITC and refunds, so it suits case-scenario questions. Mastering it also helps with Part II on Customs and with Paper 6 case studies.

What is the difference between exporting under LUT and paying IGST?

Under LUT you export without paying IGST and claim a refund of unutilised ITC, which does not cover ITC on capital goods (Section 54(3) of the CGST Act). If you pay IGST on the export, the ITC is used to pay it, so the refund of IGST paid is the only route for that supply. Exports are zero-rated supplies on either route.

Are deemed exports zero-rated like exports?

No. Deemed exports under Section 147 of the CGST Act are notified supplies of goods, and they are not zero-rated under the IGST Act. Tax is paid on them, and the refund is claimed under Section 54 read with Rule 89(2) by the recipient or the supplier as notified.

Do I need to memorise section numbers for this chapter?

Focus on the rule, its conditions and its application. Use section or rule numbers only where you are sure of them, and prefer to state the provision in plain words.

How should I prepare for the refund computation?

Learn what each term in the refund formula means, then practise several numerical cases. Show clear working so that you earn marks even if the final figure differs.