What can we actually claim a refund of?

Where exports are made under a letter of undertaking, the claim is for accumulated input tax credit attributable to those zero-rated supplies — computed by a prescribed formula rather than by identifying specific invoices. Where IGST was paid on the export instead, the claim is for that tax. The first route is the common one for services and the one this note deals with.

How is the refundable amount computed?

By formula. Net input tax credit is scaled by the ratio of zero-rated turnover to total turnover. So a business with both export and domestic revenue recovers only the export share, and the figures used must agree with the returns they are drawn from. A claim built from a separate working that does not tie to the filed returns invites rejection on that ground alone.

What proof of foreign exchange receipt is needed?

Bank realisation evidence linking the inward remittance to the export invoices. This is the single most common failure point for services, because unlike goods there is no shipping bill to corroborate that the supply happened. The remittance evidence is doing the work that export documentation does for goods, so it has to be traceable invoice by invoice.

What is the time limit?

Refund applications run from a relevant date and limitation is applied strictly. For services the relevant date depends on whether payment was received before or after the supply, which is a distinction worth getting right rather than assuming. Where credit has accumulated across several periods, the oldest are the ones at risk and should be filed first.

Our refund was rejected. Is that the end of it?

No. Rejections in this area are frequently on documentation or computation rather than entitlement, and those are curable. A rejection order should be read for what it actually found — a deficiency in evidence is a different problem from a finding that the supply was not an export at all, and only the second goes to the substance.

GST Refund on Export of Services: The Practical File

Short answer: exporting under a letter of undertaking makes accumulated input credit refundable by formula, not by tracing invoices. Claims are lost on foreign exchange receipt evidence, on turnover figures that do not tie to the returns, and on limitation — rarely on entitlement.

What is being claimed

Two routes, depending on how the export was made:

Under a letter of undertaking — no tax was paid on the export, so the claim is for accumulated input tax credit attributable to the zero-rated supplies. This is the normal route for services.
On payment of IGST — the tax paid on the export is refunded.

The rest of this note deals with the first.

The formula

The refund is not "all the credit relating to exports". It is computed by a prescribed formula that scales net input tax credit by the ratio of zero-rated turnover to total turnover.

Three consequences:

A firm with both export and domestic revenue recovers only the export share, regardless of which inputs actually went where.
The turnover figures must agree with the returns they are drawn from. A claim built on a separate management working that does not reconcile to the filed returns can be rejected on that alone.
Credit that is not properly availed cannot be refunded. Availability turns on what appears in GSTR-2B, not on holding a purchase invoice — see input tax credit and GSTR-2B.

Where services claims actually fail

Foreign exchange receipt evidence

The single biggest one, and it is structural.

For exported goods, a shipping bill independently corroborates that the goods left the country. For services, there is no equivalent. The bank realisation evidence is doing all of that work — it is the proof that the supply was made to someone outside India and paid for from outside India.

So it has to be traceable invoice by invoice. A lump-sum remittance covering several invoices, or received into an account that cannot be tied back to specific exports, creates exactly the gap the formula cannot bridge.

Turnover mismatches

Zero-rated turnover in the claim not matching the returns; total turnover computed on a different basis; periods overlapping or omitted. All arithmetic, all fatal, all avoidable by building the claim from the returns rather than alongside them.

Limitation

Applications run from a relevant date, and the limit is applied strictly.

For services the relevant date depends on whether payment was received before or after the supply was made — a distinction that is easy to get wrong and that moves the deadline.

Where credit has accumulated over several periods, the oldest periods expire first. They should be filed first, which is the opposite of the instinct to start with the most recent and best-documented period.

The export position itself

If the supply was never an export, no amount of documentation helps. That is a prior question — see the five conditions.

This matters especially for firms that were previously treated as intermediaries and are now zero-rating following the omission of the deeming provision from 30 March 2026. Credit accumulating from that date is claimable on the new footing; earlier periods are not converted by it. See the intermediary trap is gone.

Building the file

Export invoices with the required particulars and the letter of undertaking reference.
Bank realisation evidence, mapped to invoices.
Contracts identifying the overseas recipient.
The statement of invoices in the prescribed format.
A computation built from the filed returns, showing the formula applied.
Confirmation the letter of undertaking was valid for the whole period claimed.

Point six is worth checking before anything else. A refund claim for a period when no valid letter of undertaking was in place raises a question about whether IGST should have been paid on those exports — which is a larger problem than the refund being claimed.

If it is rejected

Read the order for what it actually found. There is a real difference between:

a deficiency in documentation or computation — curable, and often on a fresh application or in appeal; and
a finding that the supply was not an export — which goes to the substance and affects far more than the refund.

Both arrive as a rejection. They are not the same problem, and treating a substantive finding as a paperwork issue wastes the appeal window.

This is a working reference, not the statute. For anything you are relying on, confirm the rule and the relevant-date provisions directly.

Refund on exported services: what the file has to contain