Export from India: How to Calculate Revenue, Duties, and GST Refund (Zero-Rated Supply)
- Exports from India are zero-rated under GST — you charge 0% GST on export invoices and can claim a full refund of GST paid on inputs used in producing the exported goods.
- The export profitability calculation must account for: FOB price in foreign currency, exchange rate, customs duty (if applicable), shipping freight, insurance, and the GST refund timeline.
- India's export incentive landscape has changed significantly — MEIS is gone, replaced by RoDTEP (Remission of Duties and Taxes on Exported Products), which reimburses embedded taxes at fixed percentage rates by product.
- Exporters must understand FEMA compliance — foreign currency must be repatriated within 9 months and declared through the banking channel.
Use our Export Revenue Calculator to convert your FOB price, calculate net export revenue in INR, estimate RoDTEP benefits, and compute your GST refund entitlement.
Why Export Revenue Calculations Are More Complex Than They Look
A UK buyer offers you GBP 10,000 for a shipment of handicrafts. You calculate GBP 10,000 × ₹105 (today's rate) = ₹10,50,000 and think you've made ₹10.5 lakh.
You haven't — not until several deductions and adjustments are accounted for:
| Revenue/Cost Item | Amount |
|---|---|
| Invoice value (FOB) | ₹10,50,000 |
| Freight (air/sea) | −₹45,000 |
| Marine insurance | −₹5,000 |
| Port handling / documentation | −₹8,000 |
| Bank charges (LC, SWIFT) | −₹3,000 |
| Export agent commission (if any) | −₹21,000 (2%) |
| Currency conversion loss (1.5% spread) | −₹15,750 |
| Net realisation (before GST refund) | ₹9,52,250 |
| + GST refund on inputs (estimated 12%) | +₹1,26,000 |
| + RoDTEP benefit (say 0.5% of FOB) | +₹5,250 |
| Net export realisation | ₹10,83,500 |
The net realisation is actually higher than the headline FOB × exchange rate — because GST refund and RoDTEP benefits add back real money. But these take 1–6 months to come in and are frequently missed in cashflow planning.
GST on Exports: Zero-Rating Explained
Exports under GST are treated as zero-rated supplies — meaning you charge 0% GST to the foreign buyer but you are entitled to a full refund of GST paid on inputs (raw materials, packaging, freight, services) used in producing the exported goods.
This is fundamentally different from GST exemption. Under zero-rating:
- Export invoice: no GST charged
- GST paid on inputs: fully refundable
Two routes for handling GST on exports:
Route 1: Export Under Bond/LUT (Letter of Undertaking)
File a LUT with the GST department (online on GST portal) before exporting. Then export without paying IGST on the export invoice.
GST refund claimed: Input Tax Credit (ITC) accumulated on inputs — refunded by GST authorities.
Processing time: 30–60 days typically (GSTN processes automatically in many cases now).
Best for: Exporters with consistent ITC accumulation; avoids cashflow blockage of paying IGST upfront.
Route 2: Pay IGST and Claim Refund
Pay 18% IGST on the export invoice value, then claim the full IGST refund from customs.
Processing time: Faster than ITC refund — customs processes IGST refund automatically when export data matches ICEGATE records.
Best for: Exporters who have paid significant IGST on inputs but want a faster refund cycle.
Most Indian exporters prefer Route 1 (LUT) to avoid cashflow blockage of paying IGST upfront.
Export Revenue Calculation: The Complete Formula
Step 1: Convert FOB price to INR
FOB Price in INR = Foreign Currency Amount × Exchange Rate (use FEDAI rate for the invoice date)
Step 2: Subtract export costs
Net FOB Realisation = FOB (INR) − Freight − Insurance − Port charges − Bank charges − Agent commission
Step 3: Add export incentives
Total realisation = Net FOB − Currency conversion loss + GST Input Refund + RoDTEP benefit
Step 4: Calculate profitability
Export margin = (Total realisation − Cost of goods) ÷ Total realisation × 100
RoDTEP: India's Current Export Incentive Scheme
MEIS (Merchandise Export Incentive Scheme) was discontinued in 2021 after WTO ruled it was inconsistent with trade rules. RoDTEP (Remission of Duties and Taxes on Exported Products) replaced it.
What RoDTEP does: Reimburses embedded taxes and duties that are not otherwise refunded — state taxes, electricity cess, fuel taxes, stamp duty etc. — through a duty credit scrip system.
RoDTEP rates (indicative, vary by product HS code):
| Product Category | RoDTEP Rate (% of FOB) |
|---|---|
| Apparel and clothing | 0.5–1.5% |
| Engineering goods | 0.5–1.2% |
| Chemicals | 0.3–0.8% |
| Handicrafts | 0.5–1.0% |
| Marine products | 0.5–2.0% |
| Pharmaceuticals | 0.5–0.7% |
How to claim: RoDTEP is automatically credited to the exporter's account after shipping bill processing — no separate application in most cases. Credits received as electronic scrips can be used against import duties or transferred/sold.
Not all products are covered. Check the RoDTEP schedule on the DGFT portal for your product's 8-digit HS code to confirm eligibility and rate.
Export Documentation: What You Must Get Right
Incorrect or incomplete documentation is the leading cause of:
- Customs delays and demurrage
- Rejection of GST refund claims
- Foreign exchange non-realisation penalties
Core export documents:
| Document | Purpose | Prepared By |
|---|---|---|
| Commercial Invoice | Value and terms of sale | Exporter |
| Packing List | Details of packages, weight, dimensions | Exporter |
| Shipping Bill | Customs clearance document | Exporter/CHA |
| Bill of Lading / Airway Bill | Transport document proving goods shipped | Shipping line/airline |
| Certificate of Origin | Proves goods are of Indian origin (required for FTA benefits) | Export Promotion Council / Chamber of Commerce |
| Letter of Credit (if applicable) | Bank payment guarantee | Buyer's bank |
| GST Invoice | Tax invoice for ITC/refund purposes | Exporter |
| SDF (Statutory Declaration Form) | FEMA compliance, submitted to bank | Exporter |
For specific products:
- Food and agricultural exports: FSSAI/APEDA certificate
- Textiles: Textile Certificate from relevant council
- Pharma: Certificate of Pharmaceutical Product (CoPP)
- Handicrafts: Export Promotion Council for Handicrafts certificate
FEMA Compliance: Foreign Exchange Realisation
The Foreign Exchange Management Act (FEMA) requires that export proceeds be realised (brought into India) within a specified period.
Current rules (as of 2024):
- Goods exports: Within 9 months from the date of export
- Software/services exports: Within 15 months
- Exports to countries with currency restrictions: As specified by RBI
How realisation works: 1. Foreign buyer pays into your Nostro account or via bank transfer 2. Your bank converts foreign currency to INR and credits your account 3. Bank files e-BRC (Electronic Bank Realisation Certificate) automatically
What happens if you don't realise within 9 months:
You must apply to RBI for an extension. Repeated non-realisation can result in:
- FEMA penalties (up to 3× the unrealised amount)
- Bank flagging your account
- ECGC (Export Credit Guarantee Corporation) claim complications
Always use proper banking channels — informal cash payments from foreign buyers are a FEMA violation regardless of amount.
Export Credit: Financing Your Export Orders
Large export orders often require upfront production costs. Export credit financing helps bridge this gap.
Pre-shipment credit (Packing Credit): Bank finances production costs before the goods are shipped. Typically at LIBOR-linked rates, significantly cheaper than working capital loans.
Post-shipment credit: Finance extended after shipment, against the export documents (bill of lading), until the buyer pays.
ECGC insurance: Export Credit Guarantee Corporation provides insurance against buyer default and country risk. For exporters dealing with new markets or large single-buyer concentration, ECGC cover is essential risk management.
Export Pricing Strategy: How to Quote Competitively
Export pricing has multiple terms (Incoterms) that define where the seller's obligation ends:
| Incoterm | Seller Covers | Most Common For |
|---|---|---|
| EXW (Ex-Works) | Nothing | Buyer handles all logistics |
| FOB (Free On Board) | Factory to port loading | Most Indian export invoices |
| CIF (Cost + Insurance + Freight) | Until destination port | Seller handles shipping |
| DDP (Delivered Duty Paid) | Everything to buyer's door | E-commerce exports |
FOB is the standard for Indian exports — you're responsible until the goods are loaded on the vessel at the Indian port. After that, the buyer takes risk.
Calculating competitive FOB price:
FOB Price = Production Cost + Domestic freight to port + Port charges + Profit margin − GST refund + RoDTEP
Why GST refund reduces your effective cost: If you pay 18% GST on raw materials and get a full refund on export, your actual input cost is lower by the GST amount. This refund should be factored into pricing to stay competitive internationally.
Indian Export Promotion Councils: Find Your Sector's Support Body
Every major export sector has a government-backed Export Promotion Council (EPC) that provides market intelligence, certification, trade fairs, and buyer-seller connections.
Key EPCs by sector:
| Sector | Council |
|---|---|
| Textiles and apparel | AEPC (Apparel), TEXPROCIL (Cotton), SRTEPC (Synthetic) |
| Engineering goods | EEPC India |
| Pharmaceuticals | Pharmexcil |
| Software and IT | NASSCOM |
| Gems and jewellery | GJEPC |
| Handicrafts | EPCH |
| Spices | Spices Board |
| Marine products | MPEDA |
| Agricultural produce | APEDA |
Registering with your EPC is mandatory for claiming many export incentives (RoDTEP for some categories, advance authorisation, DFIA). Registration is typically low cost and annual.
Customs Duty on Exports: Most Goods Are Zero-Rated
India levies export duty on very few product categories. Most exports are exempt from export duty.
Products with export duty (not exhaustive):
| Product | Export Duty |
|---|---|
| Iron ore (below 58% Fe) | 30% |
| Chrome ore | 30% |
| Tanned leather | 60% |
| Raw cotton (sometimes) | As notified |
| Bauxite ore | 15% |
Export duty on manufactured goods is rare and targeted at specific strategic resources where India wants to prevent raw material drain and encourage value addition.
Common Export Mistakes
1. Not registering for GST before exporting. Without GST registration, you cannot claim the ITC refund on inputs — losing a significant portion of export profitability.
2. Missing the 9-month FEMA realisation deadline. Late realisation attracts penalties. Set calendar reminders for each export invoice.
3. Wrong HS code on shipping bill. Leads to wrong RoDTEP rate, wrong duty drawback (if applicable), and can trigger customs examination. Use ICEGATE to verify.
4. Not getting Certificate of Origin for FTA markets. If your buyer is in UAE, Australia, Japan, or ASEAN — they may qualify for import duty reduction under FTA if you provide a valid Certificate of Origin. Without it, they pay full import duty and will factor that into your negotiated price.
5. Pricing in dollars and ignoring exchange rate risk. Export invoices are in foreign currency but costs are in INR. A ₹2 rupee appreciation against USD reduces your INR realisation by ₹2 per dollar. For large orders, consider forward contracts to hedge.
6. Not filing LUT at the start of the financial year. LUT must be renewed annually (April). Missing this forces you to pay IGST upfront on exports — blocking cashflow unnecessarily.
FAQ
The Export Opportunity That Most Indians Miss
India is the world's 5th largest economy with globally competitive manufacturing in pharmaceuticals, textiles, engineering goods, gems and jewellery, software, and agricultural products. The export ecosystem — zero GST, RoDTEP incentives, EPC support, export credit — is designed to make exporting viable even for small businesses.
The businesses that succeed in export do one thing before their first shipment: calculate their landed cost, their GST refund entitlement, and their RoDTEP benefit. That number — the true net export realisation — tells them whether the price being offered is profitable.
Use our Export Revenue Calculator to convert your FOB price to INR, estimate GST refund, add RoDTEP benefit, subtract all costs, and see your true export margin — before you confirm the order.
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Open GST Calculator →Disclaimer: This article is for educational purposes only and does not constitute financial, investment, or professional advice. Please consult a qualified professional before making any decisions based on this content.