GST Refund for 100% Export Oriented Units (EOU)

GST refund for a 100 percent Export Oriented Unit is the recovery of input tax credit and integrated tax that accumulates on three transaction streams: physical exports under LUT, domestic procurement treated as deemed exports, and permitted DTA sales caught by an inverted duty structure. The EOU scheme is governed by Chapter 6 of the Foreign Trade Policy 2023 read with the Handbook of Procedures, while GST treatment flows from Section 16 of the IGST Act 2017 and Section 54 of the CGST Act 2017. Patron Accounting LLP has filed refund cycles for EOUs across textiles, engineering, pharmaceuticals, and IT/ITES since the GST rollout on 1 July 2017.

Three refund streams run in parallel for a typical EOU: zero-rated export of finished goods or services under a Letter of Undertaking (Form GST RFD-11); inverted duty refund where DTA sale rate is lower than input GST rate; and deemed export refund where the EOU procures goods from DTA suppliers under Notification 48/2017-Central Tax. Rule 96(10) of the CGST Rules - which previously barred IGST refund on payment route for EOUs availing Notification 78/2017-Customs benefit - was omitted with effect from 8 October 2024 by Notification 20/2024-Central Tax, removing a major friction point. The Gujarat High Court in Addwrap Packaging (13 June 2025) extended that relief to all pending proceedings as on the cut-off date.

Content is reviewed quarterly for accuracy.

The service applies to any unit that has obtained a Letter of Permission as a 100 percent Export Oriented Unit and operates under bonded supervision. It also applies to DTA suppliers who supply to EOUs and wish to claim deemed-export refund directly under Rule 89(2)(g).

• Manufacturing EOUs in textiles, engineering goods, gems and jewellery, leather, chemicals, and pharmaceuticals
• Service-sector EOUs including IT/ITES units, biotechnology, R and D, and agro-processing
• EHTP, STP, and BTP units that retain LUT and inverted-duty refund eligibility under GST (deemed-export status applies only to EOUs since 1 July 2017)
• DTA suppliers with active deemed export refund claims under Notification 48/2017 dated 18 October 2017
• EOUs with permitted DTA sales above 25 percent of FOB exports facing inverted duty accumulation
• New EOUs in first year of operation needing LUT setup plus initial 5-year NFE block planning

Threshold and pre-condition: GSTIN registration of the EOU is mandatory under Section 22 CGST Act, even though duty-free imports continue under Notification 78/2017-Customs dated 13 October 2017. If you have not yet registered, complete GST registration before filing the first LUT or refund. The EOU must achieve positive NFE cumulatively over 5 years from the date of commencement of production as per FTP Chapter 6 paragraph 6.04, failing which penal action under the Foreign Trade (Development and Regulation) Act 1992 follows.

• GSTIN certificate of the EOU (separate registration where multiple states involved)
• Letter of Permission (LoP) from Development Commissioner with current validity
• Active LUT acknowledgement number for the financial year (Form GST RFD-11)
• Importer-Exporter Code certificate (new units can complete IEC registration before the first export)
• Form A (prior intimation) for deemed-export procurement, pre-approved by the Development Commissioner
• Endorsed tax invoice trail from the DTA supplier with EOU acknowledgement
• Shipping bill or bill of export plus EGM for physical exports under LUT
• BRC or e-BRC for export proceeds realised within the 9-month FEMA window
• GSTR-1 (Table 6A and Table 6C) plus GSTR-3B (Table 3.1(b)) for the refund period
• Cumulative NFE computation sheet under FTP paragraph 6.10
• CA certificate in Annexure 2 of RFD-01 where the refund exceeds Rs 2 lakh
• Bond plus bank guarantee documentation where required by Development Commissioner

Worked Example - Chennai Pharma EOU Refund Cycle

All fees and charges listed are indicative only and do not constitute a binding offer. Final amounts may vary depending on the volume of work and the complexity involved.

Professional service charges for drafting, filing, and representation are separate from the statutory fees. The exact fee depends on the complexity of the case, disputed amount, and number of hearings required. Contact us for a detailed quote.

Get a free 100% EOU Refund consultation - Call +91 945 945 6700 or WhatsApp us. No-obligation assessment.

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Hyundai, Asian Paints, Bridgestone, and 200+ Indian EOUs across textiles, engineering, gems and jewellery, leather, chemicals, pharmaceuticals, IT/ITES, and biotechnology.

Outcome Proof

A Chennai-based pharmaceuticals EOU recovered Rs 3.18 crore across 12 monthly refund cycles between FY 2024-25 and FY 2025-26 through combined LUT plus inverted-duty plus deemed-export refund routes. Provisional 90 percent sanction averaged 9 days from RFD-02; final RFD-06 within 54 days. Two legacy Rule 96(10) demands totalling Rs 28 lakh were dropped citing Notification 20/2024-CT and Addwrap Packaging.

With offices in Pune, Mumbai, Delhi, and Gurugram, Patron Accounting serves EOUs across India - both in-person and remotely.

EOU compliance rarely sits in isolation. Most EOUs need adjacent GST and FTP work running in parallel:

• GST Refund - parent practice covering all Section 54 refund categories beyond EOU such as inverted duty for non-EOU manufacturers, excess balance, and Section 49(6) electronic cash ledger refunds
• GST Annual Returns - GSTR-9 and GSTR-9C reconciliation that must precede any EOU refund audit and APR submission
• GST Audit - for EOUs above the prescribed turnover threshold, departmental GSTR-9C reconciliation, and pre-audit documentation
• GST Registration - mandatory under Section 22 CGST Act for new EOUs before first LUT or refund filing; covers multi-state GSTIN where applicable
• GSTAT Appeal - Exporters - escalation route when an EOU refund order is rejected and the Appellate Authority order under Section 107 is also adverse
• GST Returns - monthly GSTR-1 Table 6A and Table 6C plus GSTR-3B Table 3.1(b) filing, the upstream control for EOU refund success

Section 16 of IGST Act 2017

Defines zero-rated supply (exports + SEZ). Section 16(3) provides two refund routes for EOU exports: LUT/bond without IGST payment with refund of accumulated ITC, or IGST-paid with refund of IGST. The LUT route is overwhelmingly the EOU norm.

Section 54 of CGST Act 2017

Section 54(1) - 2-year limitation from relevant date. Section 54(3)(ii) - substantive right to refund of accumulated ITC for inverted duty cases. Section 54(6) - provisional 90 percent refund for zero-rated supplies. Section 54(7) - final refund within 60 days. Section 54(8) - unjust enrichment doctrine. Section 56 - 6 percent interest if delayed beyond 60 days; 9 percent for appellate orders.

Section 147 of CGST Act 2017

Empowers the Central Government to notify deemed exports. Operationalised by Notification 48/2017-Central Tax dated 18 October 2017 listing supplies to EOU as deemed exports.

Rule 89 of CGST Rules 2017

Refund procedure. Rule 89(2) - documentary evidence. Rule 89(2)(g) - deemed exports specific documentation. Rule 89(4) - maximum refund formula for zero-rated. Rule 89(5) - inverted duty formula post-2022 amendment excluding input services and capital goods from Net ITC.

Rule 96A of CGST Rules 2017

LUT mechanism in Form GST RFD-11. Valid for one financial year. Subject to Notification 37/2017-CT prosecution eligibility test (no prosecution for tax evasion above Rs 2.5 crore).

Notification 48/2017-Central Tax (18.10.2017)

Lists supplies to EOU/EHTP/STP/BTP as deemed exports under Section 147. Refund claimable by either supplier or recipient EOU, never both. Foundational for Route C deemed export refunds.

Notification 49/2017-Central Tax (18.10.2017)

Evidence required from supplier of deemed exports - undertaking from the non-claiming party that they will not claim refund on the same invoice.

Notification 78/2017-Customs (13.10.2017)

IGST and Compensation Cess exemption on imports by EOU under FTP Chapter 6 - issued on the recommendation of the GST Council at its 22nd meeting on 6 October 2017. EOU imports therefore continue duty-free under GST.

Notification 22/2003-Central Excise (31.03.2003)

Continuing CT-3 procedure for ab-initio excise exemption on Fourth Schedule items (petroleum products, tobacco) procured by EOUs. Excise jurisdiction survives for Fourth Schedule items.

Notification 20/2024-Central Tax (08.10.2024)

Omitted Rule 96(10) of CGST Rules with prospective effect from 8 October 2024. Previously, Rule 96(10) barred IGST refund on payment route for EOUs availing Notification 78/2017-Customs benefit. The Gujarat High Court in Addwrap Packaging Pvt Ltd (13 June 2025) extended this relief to all pending proceedings where final adjudication had not yet taken place.

Circular 14/14/2017-GST (06.11.2017) and Circular 233/27/2024-GST (10.09.2024)

14/14/2017-GST sets out the procedure for DTA supplies to EOU/EHTP/STP/BTP units. 233/27/2024-GST provides relaxation for AA holders and 100 percent EOUs against past Rule 96(10) recovery proceedings.

DGFT Notification 10/2025-26 (26.05.2025) and 66/2025-26 (23.03.2026)

Notification 10/2025-26 extended RoDTEP under Appendix 4RE to SEZ, EOU, and Advance Authorisation exporters with effect from 1 June 2025. Notification 66/2025-26 restored RoDTEP rates and value caps to full notified levels after a brief 50 percent rationalisation.

FTP 2023 Chapter 6 and Foreign Trade (Development and Regulation) Act 1992

FTP Chapter 6 sets up EOU eligibility, NFE requirement, DTA sales entitlement, exit procedure, and APR requirement. Penalty exposure for NFE shortfall runs under the FT (D and R) Act 1992 plus refund of customs duties forgone; permanent loss of LoP in worst case.

Three statutory clocks run together for an EOU. Miss any one and the consequences are different but each is material:

• 9-month FEMA window - RBI master direction on export of goods and services; export proceeds realisation deadline; without timely realisation or RBI extension, Section 16(3) IGST refund eligibility lapses
• 2-year refund limitation under Section 54(1) - counted from relevant date; permanent loss of refund right; no condonation under Section 54 itself
• 5-year cumulative NFE window - FTP paragraph 6.04; falling short triggers penal action under FT (D and R) Act 1992 plus payment of duties forgone; permanent loss of LoP in worst case
• LUT FY 2026-27 filing - before 31 March 2026 (or first export of FY 2026-27); every export from 1 April 2026 attracts IGST upfront if LUT not on record
• RFD-02 acknowledgement - within 15 days of RFD-01 (Rule 90(2)); escalate via grievance under Rule 90 if officer fails
• RFD-04 provisional 90 percent - within 7 days of RFD-02 for Route A LUT (Section 54(6)) and Route B IDS (CBIC Instruction 6/2025 from October 2025)
• RFD-06 final sanction - within 60 days of RFD-01 (Section 54(7)); 6 percent Section 56 interest if delayed; 9 percent for appellate orders
• Section 107 appeal - within 3 months of refund rejection; 10 percent pre-deposit
• Section 112 GSTAT appeal - within 3 months of Appellate Authority order; additional 10 percent pre-deposit

Engage Patron Accounting for EOU compliance retainer - share LoP, GSTINs, last 12 months GSTR-1 / GSTR-3B, and APR working. Call +91 945 945 6700 or WhatsApp us now.

GST refund for a 100 percent EOU is the difference between recovering working capital quickly and watching it sit in the Electronic Credit Ledger for quarters. FTP Chapter 6, Notifications 48/2017 and 78/2017, and Section 54 of the CGST Act together set up a three-route refund framework that rewards meticulous documentation: LUT exports under Section 16 IGST Act, inverted duty on DTA sales under Rule 89(5), and deemed export procurement under Section 147 read with Notification 48/2017-CT.

The October 2024 omission of Rule 96(10) by Notification 20/2024-CT, the Gujarat High Court ruling in Addwrap Packaging (13 June 2025) extending that relief to pending proceedings, and the extension of RoDTEP to EOUs from 1 June 2025 under Appendix 4RE collectively reshape the EOU refund landscape. CBIC Instruction 6/2025 from October 2025 brings inverted duty into the 7-day provisional 90 percent refund window. Exporters who route their compliance through these post-October 2024 reforms recover materially more cash, materially faster.

Patron Accounting LLP's CA and CS team handles the end-to-end EOU compliance stack - LUT, NFE tracking, APR, deemed-export refunds, and inverted-duty refunds. With offices in Pune, Mumbai, Delhi, and Gurugram and a national client base of 10,000+ businesses, we are equipped to manage refund cycles for EOUs of any size across textiles, engineering, pharmaceuticals, gems and jewellery, IT/ITES, biotechnology, and agro-processing.