57th GST Council refund changes: what applies to service exporters and when

The Council’s 8 October 2026 recommendations apply only after the law and rules are amended. Until then, file and track your claim under the current rules.

This guide covers refunds of accumulated input tax credit (ITC) on exports of services under a Letter of Undertaking (LUT). It is based on the Council’s press release and the official FAQs on its recommendations. The release states that the recommendations take effect through circulars, notifications and law amendments, which alone have the force of law. Press release, closing note.

Which recommendations affect an LUT service-export claim?

Recommendation	What it would change	Timing given
Acknowledgement deadline	The officer must issue RFD-02 or RFD-03 within 10 days of filing instead of 15. If neither is issued, the portal treats the application as acknowledged.	Phase I; no date announced
Automatic provisional refund	For low-risk zero-rated claims, the system sanctions 90% of the amount claimed after acknowledgement. The FAQs propose an RFD-04 within three working days of acknowledgement.	Phase I; no date announced
Automatic acknowledgement and final refund	The system validates the application and, for low-risk zero-rated claims, also sanctions the final refund. For services, realisation of export proceeds is checked against the RBI’s EDPMS.	Phase II; no date announced
New RFD-01 layout	Details are entered in the application in a system-readable format, and scanned documents are no longer uploaded for zero-rated claims.	No date announced
Capital-goods credit	Eligible ITC on capital goods enters Net ITC for refunds on exports under LUT, one-sixtieth for each month.	ITC availed on or after 1 April 2027
₹1,000 minimum refund	The minimum applies to CGST, SGST/UTGST and IGST together, instead of to each tax head.	No date announced
Services to your own foreign branch	Services supplied to or through the supplier’s own offices or branches outside India can qualify as exports.	No date announced; needs an IGST Act amendment

Sources: press release, paragraphs 6, 8 and 10; FAQs on refunds, questions 1, 8, 11, 24 and 28.

The Council also recommended refunds of input-service credit for inverted duty structure claims and the removal of the 1.5-times limit on the turnover of exported goods. Neither changes the calculation for an export of services under LUT.

What applies to a claim you file now?

Until the amendments are notified, the current rules apply:

• The officer has 15 days from filing to issue RFD-02 or RFD-03.
• Provisional refunds follow the risk-based process in place since 1 October 2025. An RFD-04 is due within seven days of acknowledgement for claims the system identifies as low risk.
• Net ITC for an LUT export refund excludes credit on capital goods.
• Interest is payable on a refund that is not paid within 60 days of filing.

The refund stages and timelines guide explains each current deadline. See also capital goods in the current calculation and interest on a delayed refund.

Before you rely on a 10-day or three-day timeline, check that the amending notification has been issued and the date from which it applies. CBIC publishes notifications on its tax information portal.

Do not hold back a claim for the new process. No start date has been announced, and the two-year time limit for filing a refund under section 54(1) of the CGST Act keeps running.

Will a claim I have already filed get the automatic provisional refund?

The release and the FAQs do not say. They describe how claims will be processed once the changes apply. They do not say whether an application filed earlier moves to the automated route.

This matters most for claims that have waited for months. CA Pratik Bharda described a client, a UI designer billing US clients through Stripe, whose claim was filed in February 2026 and was still awaiting provisional sanction in October. For a pending claim, follow up under the current rules: see what to do if the status does not move.

Which claims will not get the automatic 90%?

According to the FAQs, an officer scrutinises these claims before any provisional refund is sanctioned:

• Claims by a person who has not completed Aadhaar authentication under rule 10B of the CGST Rules.
• Claims where the department has issued a show-cause notice (DRC-01) against a refund order (RFD-06), or has filed an appeal against an earlier order that is still undecided.
• Claims the system does not classify as low risk.
• Claims by certain notified suppliers of goods, such as areca nuts, pan masala and tobacco.

FAQs on refunds, questions 4 and 10.

If you are not sure whether your registration has completed Aadhaar authentication, ask whoever manages your GST registration before you file.

Capital-goods credit from April 2027

Net ITC for an LUT export refund currently includes credit on inputs and input services only. The Council recommends adding eligible ITC on capital goods, such as a laptop or server capitalised in your books, when that credit is availed on or after 1 April 2027. The change does not affect exports made with payment of IGST. FAQs on capital goods, questions 1, 2 and 4.

The credit is spread over 60 months: one-sixtieth for each month, starting with the month in which you avail it. Blocked credit and other inadmissible credit stay out, and any required reversal, such as under rule 43, is deducted. The exact formula will be set in the amended rule 89. FAQs on capital goods, questions 5 to 7.

The following example uses invented figures and follows the method the FAQs describe.

Item	Amount
ITC on a laptop, availed in April 2027	₹18,000
One-sixtieth for each month	₹300
Months in an April–June 2027 claim	3
Capital-goods credit in that claim’s Net ITC	₹900

The same laptop adds ₹300 a month to later claims until its 60 months end. Net ITC then goes through the usual export-turnover proportion and credit-ledger limits, explained in the refund calculation guide. Capital goods on which ITC was availed before 1 April 2027 are not covered.

Keep reporting capital goods under the Capital Goods category in Annexure B, which the current utility already provides, and record the month in which you availed each credit. You will need both when the amended rule applies.

Services to your own foreign branch

At present, a supply of services is not an export when the supplier and the recipient are establishments of the same person, such as an Indian office and its own branch abroad. The Council recommends removing that condition so that such services can qualify as exports and support refunds. This needs an amendment to the IGST Act. Press release, paragraph 10.

The recommendation concerns a business’s own offices and branches outside India. Supplies to a separate foreign company in the same group raise different questions, which this change does not address. Taxology India described the change as relief for IT and ITES companies that supply services through overseas branches.

The Council also recommended a circular to clarify when export payments may be received in foreign exchange or in Indian rupees.

Prepare records that pass system checks

Automated processing depends on data that matches. The FAQs ask applicants to make sure that:

• the figures in the refund application match their returns and other documents;
• blocked credit, such as ITC restricted under section 17(5), is left out of the calculation;
• reversals required under rules 42 and 43 have been made.

FAQs on refunds, question 26. In Phase II, export proceeds for services will be checked against the RBI’s EDPMS. Question 24.

For an LUT service-export claim, check these before you file:

1. Each export invoice in Statement 3 matches the invoice in your filed GSTR-1: number, date and value.
2. Each BRC or FIRC in Statement 3 matches your bank’s record of that payment. A payment can arrive in a later month than its invoice. Keep a working sheet that shows which receipt settles which invoice; see the Statement 3 worked example.
3. Each invoice in Annexure B appears in the GSTR-2B period you enter, and the ITC matches what you claimed in GSTR-3B; see which GSTR-2B period to enter.

To create both files and check them before upload, see create Statement 3 and Annexure B JSON files without Excel.