Refunds and Export/Import under GST: Zero-Rated Supplies, LUT/Bond and Refund Process (Overview) Questions

Question 1

Define zero-rated supply under GST (basic).

Accepted Answer

**Zero-rated supply** refers to specified supplies like **exports/SEZ supplies** where output tax burden is effectively zero and refund of taxes/ITC may be available (overview).

Question 2

Imports generally attract IGST. (True/False)

Accepted Answer

True. Imports are generally treated as inter-state supplies and attract **IGST** (concept).

Question 3

Exports are treated as zero-rated supplies. (True/False)

Accepted Answer

True. Exports are generally treated as **zero-rated** under GST (concept/overview).

Question 4

LUT stands for:

Accepted Answer

**Letter of Undertaking (LUT)**.

Question 5

State one reason why refunds are important in GST.

Accepted Answer

Refunds ensure exports/zero-rated supplies do not carry domestic tax burden and improve business **liquidity** (concept).

Question 6

Refund under GST can include refund of excess tax or unutilized ITC. (True/False)

Accepted Answer

True. Refund may relate to excess tax paid or eligible refund of **IGST/ITC** (concept/overview).

Question 7

Differentiate zero-rated supply and exempt supply (any three points) using a table.

Accepted Answer

Difference (basics) (concept/overview):

| Basis | **Zero-rated** | **Exempt** |
|---|---|---|
| Typical examples | exports/SEZ supplies | supplies exempted by notification |
| Output tax | effectively zero burden | no GST charged |
| ITC/refund | refund/ITC route generally available (overview) | ITC may be restricted (overview) |

Any three differences are sufficient.

Question 8

Explain the two export refund options under GST (LUT/Bond vs pay IGST) using a table.

Accepted Answer

Two common routes (overview):

| Option | What you do | What refund you claim |
|---|---|---|
| **LUT/Bond** | export without paying IGST | refund of unutilized **ITC** |
| Pay **IGST** | pay IGST on export supply | refund of **IGST** paid |

Write the table and conclude: both aim to keep exports tax-free in burden sense (concept).

Question 9

List any three refund types under GST (overview) and give one example each (use a table).

Accepted Answer

Refund types (overview):

| Refund type | Example |
|---|---|
| Excess tax paid | wrong tax paid by mistake |
| Refund of **IGST** on exports | export with IGST payment |
| Refund of unutilized **ITC** | export under LUT/Bond |

Any three types with examples are sufficient.

Question 10

Write basic steps of GST refund process (any three steps) and draw a flowchart.

Accepted Answer

Basic steps (overview):

- check **eligibility** and compute refundable amount
- file refund application online with required documents
- verification/processing and sanction/rejection (overview)

Flowchart:

```text
Eligibility -> Application -> Verification -> Sanction -> Credit to bank
```

Question 11

Differentiate export under LUT/Bond and export with payment of IGST (any three points) using a table.

Accepted Answer

Difference (overview):

| Basis | **Export under LUT/Bond** | **Export with IGST payment** |
|---|---|---|
| Tax payment at export | no IGST paid on invoice | IGST paid on export supply |
| Refund claim | refund of unutilized **ITC** | refund of **IGST** paid |
| Cash flow | better **working capital** (no upfront tax) | upfront tax paid, refund later (concept) |

Any three differences are sufficient.

Question 12

Write any three common documents/data points needed for export refund claims and why each matters (use a table).

Accepted Answer

Any three (overview):

| Document/data | Why it matters (concept/overview) |
|---|---|
| **Tax invoice** | links supply value and GST details |
| Shipping bill / export details | proves export movement and destination |
| Return details (GSTR) | enables system matching for refund |
| Bank details | credit of refund amount |

Write any three with one-line reason.

Question 13

Explain zero-rated supplies and refund mechanism in GST (exam-style) with a table and flowchart.

Accepted Answer

### Meaning
**Zero-rated supplies** (exports/SEZ) are treated so that the final tax burden on exports is zero, supported by refund of **IGST** or **ITC** (concept/overview).

### Two routes (table)

| Route | Payment on export | Refund claim |
|---|---|---|
| **LUT/Bond** | no IGST payment | refund of unutilized **ITC** |
| Pay **IGST** | pay IGST on export | refund of **IGST** paid |

### Flow (overview)

```text
Export supply -> Choose route (LUT or pay IGST)
            -> File returns + refund application -> Verification -> Refund sanctioned
```

Conclusion: Zero-rating ensures exports are competitive and not burdened by domestic GST (concept).

Question 14

Write an exam-style note on LUT/Bond (basics): meaning, benefits and compliance points (use headings and a table).

Accepted Answer

### Meaning
**LUT/Bond** is a commitment to export goods/services **without payment of IGST** and comply with conditions (overview).

### Benefits
- avoids paying IGST upfront → improves **working capital** (concept)
- enables refund of accumulated **ITC** on inputs used for export (overview)

### Compliance points (table)

| Point | What it means (overview) |
|---|---|
| Conditions/time limits | export and realization within prescribed limits |
| Documentation | proper invoices/shipping bills/returns linkage |
| Eligibility | LUT/Bond applicability as per rules |

Conclusion: LUT/Bond route is preferred when the exporter wants to avoid upfront IGST payment (concept).

Question 15

Explain common reasons for GST refund delays/rejections and how to prevent them (exam-style) with a table.

Accepted Answer

### Common reasons (overview)
Refunds can be delayed/rejected due to mismatches and documentation errors.

| Reason | Prevention step (concept/overview) |
|---|---|
| data mismatch (invoice vs shipping vs returns) | reconcile before filing |
| missing/incorrect documents | upload correct documents and references |
| wrong classification (exempt vs zero-rated) | classify correctly and disclose properly |
| ineligible ITC included | claim only eligible **ITC** and compute correctly |
| incorrect bank details | verify bank account details |

Conclusion: Clean data + correct classification + timely returns improve refund sanction speed (concept).

Basis	Zero-rated	Exempt
Typical examples	exports/SEZ supplies	supplies exempted by notification
Output tax	effectively zero burden	no GST charged
ITC/refund	refund/ITC route generally available (overview)	ITC may be restricted (overview)

Refunds and Export/Import under GST: Zero-Rated Supplies, LUT/Bond and Refund Process (Overview)

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