Trade Policy
Deemed Exports in India: Meaning, Benefits & Refund (2026)
Deemed exports never leave India — yet FTP 2023 treats them as exports. This guide explains who qualifies, what benefits apply, why GST is charged and refunded, and the exact procedure with 4 practical examples.
What Are Deemed Exports in India? Quick Answer
Deemed exports are domestic supplies that the Foreign Trade Policy treats as exports even though the goods never leave India. Payment is received in Indian rupees or free foreign exchange, the goods must be manufactured in India, and only supplies listed in FTP 2023 para 7.02 qualify. For GST, the same term covers only goods notified under Section 147 CGST Act (Notification 48/2017-Central Tax dated 18.10.2017) — again, goods only, not services — and the supply is taxable with a later refund, not zero-rated.
| Question | Short answer |
|---|---|
| What is a deemed export? | A domestic supply of India-manufactured goods notified as deemed export (FTP 7.02; GST Sec 147/Notn 48/2017) |
| What supplies qualify? | FTP: Advance Authorisation/DFIA, EOU/STP/EHTP/BTP, EPCG, multilateral/bilateral funded projects (ICB), para 50/2017 projects, mega-power, UN, nuclear; GST: 4 categories only (see section 7) |
| Are goods physically exported? | No — goods do not leave India |
| Who can claim benefits? | FTP benefits via ANF-7A to DGFT RA; GST refund via FORM GST RFD-01 by recipient or supplier with undertaking |
| Is GST charged? | Yes — invoice with GST; reported in GSTR-1 Table 6C and GSTR-3B Table 3.1(a) |
| Can GST paid be refunded? | Yes — refund of tax paid is admissible to recipient or supplier (not both) under Rule 89 |
| Deemed export vs export? | Physical exports and SEZ supplies are zero-rated (LUT/bond, no tax); deemed exports are taxable-then-refunded, no LUT |
Two laws, two lists
FTP Chapter 7 and GST Notification 48/2017 use overlapping but different lists. A supply can be a deemed export for FTP benefits without being a deemed export for GST refund, and vice versa only if it appears in both. Always test eligibility under the law you are claiming under.
Deemed export meaning in simple terms
Imagine a Pune auto-component maker selling gear housings not to a German buyer but to an Indian company that holds an Advance Authorisation to make gearboxes for export. The housings never cross the border, the payment is in rupees, but because the buyer will use those housings to earn foreign exchange, FTP rewards the Pune supplier as if it had exported. That reward is what deemed export means: the government deems the domestic supply to be an export for duty and tax relief.
- Domestic, not cross-border: buyer and seller are both in India and goods are delivered in India.
- Manufactured in India is mandatory — trader-only resupply or imported goods resold do not qualify.
- Payment in INR or free foreign exchange is allowed; receipt must be evidenced for the claim.
- Category decides eligibility: only the para 7.02 list (FTP) and the 4-category GST notification count — not every supply to an EOU, SEZ or project.
For a business audience the distinction is practical: deemed exports help the supplier of inputs, not the final exporter. The final exporter still exports; the supplier gets input-side benefits for feeding that export chain domestically.
Exports vs deemed exports vs zero-rated vs SEZ supplies
Mixing these terms causes rejected refunds. Physical exports and SEZ supplies are zero-rated under Section 16 IGST Act; deemed exports are not. Each has a different GST reporting table and claim route.
| Aspect | Deemed export | Physical export | Supply to SEZ (authorised operations) |
|---|---|---|---|
| Do goods leave India? | No | Yes | To SEZ, not necessarily outside India |
| Payment currency | INR or free forex | Forex (realised via eBRC) | Forex/authorised terms |
| Goods vs services | Goods only (Sec 147) | Goods and services | Goods and services |
| GST treatment | Taxable; tax then refundable | Zero-rated | Zero-rated |
| GSTR-3B table | Table 3.1(a) taxable | Table 3.1(b) zero-rated | Table 3.1(b) zero-rated |
| LUT / bond? | No — not available | Yes — supply without tax under LUT | Yes — under LUT |
| Refund avenue | FORM GST RFD-01 (supplier or recipient) | RFD-01 / IGST refund or unutilised ITC | RFD-01 by supplier after SO endorsement |
| FTP benefit | Chapter 7 (AA/DFIA, drawback, TED) | Chapter 4/5/6 schemes + RoDTEP/ROSCTL | SEZ Act benefits (different law) |
| RoDTEP eligible? | No | Yes (if product in Appendix 4R) | No — SEZ to DTA is not RoDTEP |
Reporting trap to avoid
Do not report a deemed-export invoice in GSTR-3B Table 3.1(b) or GSTR-1 zero-rated tables. Report taxable value in Table 3.1(a) and show the invoice in GSTR-1 Table 6C. Mis-classification is a common reason for RFD-01 rejection.
Which supplies are treated as deemed exports? FTP para 7.02
FTP 2023 Chapter 7, para 7.02 lists seven buckets. Categories (a) to (c) are supplied by a manufacturer; categories (d) to (g) are supplied by a main contractor or sub-contractor to projects/agencies. This is the authoritative FTP list — DGFT Chapter 7 PDF and dgft.gov.in/CP?opt=deemed-export state it verbatim.
| Code | Supply to / against | Who supplies |
|---|---|---|
| 7.02(a) | Supply against Advance Authorisation / Advance Authorisation for Annual Requirement / DFIA | Manufacturer |
| 7.02(b) | Supply to EOU / STP / EHTP / BTP | Manufacturer |
| 7.02(c) | Supply of capital goods against EPCG Authorisation | Manufacturer |
| 7.02(d) | Projects financed by multilateral/bilateral Agencies/Funds notified by DEA (MoF) where tender is ICB without customs duty or DDP-based turnkey | Main / sub-contractor |
| 7.02(e) | Projects/purposes where Customs Notification 50/2017 permits zero basic customs duty import, under ICB; includes mega power projects at Sl. No. 598 List 31 (threshold capacity; ICB waived if power tied via tariff bidding) | Main / sub-contractor |
| 7.02(f) | United Nations or International Organisation for official use or to projects financed by them (Notn 84/97-Customs; Appendix 7B agencies) | Main / sub-contractor |
| 7.02(g) | Nuclear power projects (Notn 50/2017 Sl. No. 602 List 32, ≥440 MW, Joint Secretary DAE certificate, NCB or ICB) | Main / sub-contractor |
- Appendix 7A lists multilateral/bilateral agencies for (d); Appendix 7B lists UN agencies for (f) — attach the relevant appendix reference.
- Steel, cement and fuel have restricted benefits under para 7.08: cement only under 7.02(d), steel as inputs to AA/DFIA/EOU or to (d) agencies, fuel (Schedule 4) only to EOU or AA holder.
- SEZ is not in this list — supply to SEZ is zero-rated under IGST Act, not a deemed export under FTP Chapter 7.
Eligibility conditions you must meet
Category alone is not enough. FTP 7.07–7.08 and HBP 2023 Chapter 7 impose common conditions; missing one rejects the claim even if the category is correct.
- Goods must be manufactured in India — trading or imported-stock resale does not qualify.
- Supply must be direct to the designated project/agency/unit/Authorisation holder; third-party supply is not eligible (HBP 7.07(i)–(ii)).
- Sub-contractor to main contractor is allowed, but name of sub-contractor must be in the main contract before supply date, and payment mechanics follow the main contract (7.07(iii)).
- Steel via service centres/distributors under Ministry of Steel O.M. dated 27.05.2020 is allowed only if manufacturer invoices the AA holder directly with cross-reference.
- Payment must be received — FTP claim is filed only after full payment to extent of supplies for (a)–(c); for (d)–(g) HBP 7.05(b) applies.
- One application per category: ANF-7A must pertain to only one para 7.02 category; multiple categories cannot be clubbed (HBP 7.05(c) as amended).
- Do not assume every EOU/EPCG/government project is automatic — check Advance Authorisation/DFIA validity, EOU LoP status, ICB documentation, and Appendix 7A/7B listing.
GST eligibility is narrower
For GST refund, only the four categories in Notification 48/2017 count. A 7.02(d)–(g) project supply may be a deemed export for FTP drawback but not for GST RFD-01 unless it also falls under one of the four GST categories. Test GST eligibility separately.
Deemed export benefits under FTP (para 7.03)
If supply qualifies under 7.02 and meets 7.07 conditions, FTP 7.03 offers three benefits subject to HBP and ANF-7A — not an automatic package, you apply for what the HBP allows for that category.
| Benefit | What it is | Where it applies |
|---|---|---|
| Advance Authorisation / DFIA | Authorisation to import inputs duty-free for making the deemed-export goods | Para 7.03(a); under Chapter 4 HBP; against invalidation letter for intermediate goods |
| Deemed Export Drawback | Refund of customs duties on inputs used in the deemed-export goods | Para 7.03(b); rates and conditions in HBP |
| Refund of Terminal Excise Duty (TED) | Refund of excise duty on Schedule 4 goods (Central Excise Act, 1944) where supply is eligible and not exempt | Para 7.03(c); only Schedule 4 fuel/petroleum items, not GST goods |
- TED is only for excisable goods in Schedule 4 (e.g., certain petroleum products) — GST goods use the GST refund route, not TED.
- Deemed-export benefits for cement, steel and fuel are restricted per para 7.08 (see table in previous section).
- Interest at 6% p.a. is payable if drawback/TED is not settled within 30 days of the RA final approval letter (para 7.09).
- Risk management audit: 10% random audit by Joint DGFT-led internal audit team; RA may reassess and recover with 15% interest if ineligible payment is found (para 7.10).
Deemed exports and GST — taxable, not zero-rated
The GST law excerpt in the GST Council flyer is explicit: deemed exports are not zero-rated supplies by default. Every notified deemed-export supply is subject to tax — you charge GST, you cannot supply under bond/LUT, and you claim refund of tax paid under Section 54 read with Section 147 and Rule 89. FTP 7.01(ii) says the same: deemed exports for GST include only supplies notified under Section 147 on GST Council recommendation.
| # | Supply (goods only) |
|---|---|
| 01 | Supply of goods against Advance Authorisation |
| 02 | Supply of capital goods against EPCG Authorisation |
| 03 | Supply of goods to Export Oriented Unit (EOU) |
| 04 | Supply of gold by bank/PSU (Notn 50/2017-Customs) against Advance Authorisation |
- Supplier issues a tax invoice with applicable GST (CGST+SGST or IGST as per place of supply).
- Report invoice in GSTR-1 Table 6C and liability in GSTR-3B Table 3.1(a) — not in zero-rated Table 3.1(b).
- Recipient must not have claimed the supply as zero-rated/SEZ in its returns; classification dispute is a common rejection ground.
- Manual filing under Circular 17/17/2017 and 24/24/2017 was prescribed when the refund module was unavailable — now filed online as FORM GST RFD-01 on the common portal before two years from return due date.
GST refund on deemed exports — who claims and when
Rule 89(1) third proviso lets either the recipient or the supplier claim, but never both for the same invoice. The choice has an ITC consequence that every supplier-recipient pair must agree in writing before filing.
| Claimant | Condition | What to file |
|---|---|---|
| Recipient | Recipient claims refund of tax paid on the supply | RFD-01 with invoice statement; can also claim refund of ITC on other inputs used for zero-rated supplies per Rule 89(4A) if supplier availed Notn 48/2017 benefit |
| Supplier | Recipient does NOT avail ITC on that supply and gives undertaking that supplier may claim | RFD-01 with invoice statement plus recipient undertaking; supplier declares tax was paid and recipient ITC not availed |
- File before expiry of two years from date return relating to supply is to be furnished electronically (GST Council flyer and Rule 89).
- Accompany RFD-01 with statement of invoice number/date and evidences as notified; keep GSTR-1/3B extracts ready.
- Supplier-claim route bars recipient from availing ITC on that invoice — recipient must reverse if already taken.
- Acknowledgement is issued within 7 days if documents are complete; provisional and final timelines follow Chapter 7 HBP and GST circulars — do not promise 7-day sanction as a guarantee; RA verification applies.
- If supplier claimed GST refund, recipient cannot also export that supply on payment of IGST and claim IGST refund (Rule 96(9) as amended by Notn 75/2017).
Documents, procedure, 4 examples, common mistakes and key takeaways
Deemed-export relief is document-intensive. DGFT RAs and GST officers verify category, direct-supply chain and tax reporting — a missing ICB award or a misreported GSTR table rejects an otherwise valid claim.
| Track | Key documents |
|---|---|
| FTP ANF-7A (to RA, Appendix 1A) | ANF-7A form, invoice, proof goods manufactured in India, category evidence (AA/DFIA/EPCG authorisation copy, EOU LoP, ICB award letter/Project Authority certificate, Appendices 7A/7B reference, 50/2017 or nuclear/UN notification reference), direct-supply declaration, payment proof, EOU Form-B where applicable |
| GST RFD-01 (online) | Tax invoice, GSTR-1 Table 6C extract, GSTR-3B Table 3.1(a) extract, recipient undertaking (if supplier claims), statement of invoices, bank proof |
Procedure in brief: for FTP, file ANF-7A online on dgft.gov.in to jurisdictional RA — one category per application, after full payment for (a)–(c) and per 7.05(b) for (d)–(g); for GST, file RFD-01 online before the 2-year limit. DGFT PN 25/2025-26 streamlined ANF-7A and Chapter 7 filing; categories themselves are unchanged. RA scrutiny includes 10% random internal audit and possible reassessment with 15% recovery interest if ineligible.
Four realistic examples:
- Example 1 — AA holder: A Coimbatore forging unit supplies machined shafts (manufactured in Coimbatore) against an Advance Authorisation held by a Chennai auto exporter (para 7.02(a) and GST Notn 48/2017 Sl. 01). Supplier invoices with IGST, reports in GSTR-1 6C/3.1(a), recipient gives undertaking not to avail ITC, supplier files RFD-01 and separately files ANF-7A for Deemed Export Drawback.
- Example 2 — EOU: A Surat textile mill supplies dyed fabric to an EOU in the same state (para 7.02(b) and GST Sl. 03). Supply is direct, payment received in INR, goods manufactured in Surat. EOU maintains Form-B (receipt/use/removal) under GST and supplier files GST refund on undertaking; mill also claims drawback via ANF-7A.
- Example 3 — EPCG: A Rajkot machine-tool maker supplies a CNC lathe to an EPCG holder in Pune (para 7.02(c) and GST Sl. 02). Supplier is manufacturer, lathe is India-made capital good, invoiced with GST, reported correctly. EPCG holder endorses receipt; supplier files refund with recipient undertaking.
- Example 4 — ICB project: An EPC contractor's Indian sub-contractor supplies India-made switchgear directly at a multilateral-funded transmission project site awarded under ICB without customs duty (para 7.02(d)(i)). Sub-contractor name was in main contract before supply (7.07(iii)), payment comes from Project Authority, and claim is under Appendix 7A agency. This is FTP deemed-export via contractor route; GST refund applies only if the supply also falls under one of the four GST categories — many (d)–(g) project supplies do not, so FTP drawback/TED may apply without GST RFD-01.
- Mistake 1: Treating every SEZ supply as deemed export — SEZ is zero-rated, not deemed export; wrong table means rejection.
- Mistake 2: Assuming services qualify — both FTP and GST notifications cover goods only.
- Mistake 3: Clubbing multiple para 7.02 categories in one ANF-7A — one category per application is mandatory (HBP 7.05(c)).
- Mistake 4: Third-party or trader supply without manufacturing proof — fails manufactured-in-India test.
- Mistake 5: Filing GST refund in Table 3.1(b) or under LUT — deemed exports cannot use LUT/bond.
- Mistake 6: Both supplier and recipient filing for same invoice — only one claimant is allowed.
- Mistake 7: Filing FTP claim before payment is fully received for (a)–(c) supplies.
Key takeaways (2026)
Deemed exports are domestic but policy-deemed exports — FTP 2023 Chapter 7 lists seven buckets (a)–(g), GST Notification 48/2017 lists four. Goods must be manufactured in India, supplied directly, and paid for. FTP benefits are AA/DFIA, drawback and TED (Schedule 4); GST benefit is tax-paid then refunded via RFD-01 within two years by recipient or supplier with undertaking. Report in GSTR-1 6C / GSTR-3B 3.1(a), never as zero-rated, never under LUT, never as RoDTEP.
Need help with deemed exports?
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Contact usFrequently asked questions
Is deemed export an export?
A deemed export is not a physical export. Goods do not leave India and payment may be in INR or free foreign exchange. FTP 2023 deems the domestic supply to be an export only for the categories in para 7.02 and only if goods are manufactured in India. For GST, a supply is a deemed export only if notified under Section 147 CGST Act (Notification 48/2017).
Is deemed export zero-rated under GST?
No. Unlike physical exports and supplies to SEZ (Section 16 IGST Act, zero-rated), deemed exports are taxable domestic supplies. The supplier must issue a tax invoice, charge applicable CGST/SGST/IGST and report it in GSTR-1 Table 6C and GSTR-3B Table 3.1(a). The tax paid can later be refunded via FORM GST RFD-01 — the supply cannot be made under bond/LUT.
Who can claim the GST refund on deemed exports?
Either the supplier or the recipient can claim, but not both for the same invoice. Under the third proviso to Rule 89(1) CGST Rules, the recipient may claim the refund of tax paid on the supply. Alternatively the supplier may claim if the recipient does not avail ITC on the supply and furnishes an undertaking that the supplier may claim the refund. The application is filed in FORM GST RFD-01 on the common portal within two years from the date the return relating to the supply is to be furnished.
Can a supplier claim GST refund on deemed exports without an undertaking?
No. If the supplier files the refund, the recipient must not have availed ITC on that invoice and must give a written undertaking that the recipient will not claim the refund. The supplier files the undertaking with the RFD-01 and retains evidence that payment was received directly for FTP categories.
What documents are required for a deemed export benefit?
For FTP benefits: ANF-7A with invoice, proof goods are manufactured in India, evidence of category (e.g., Advance Authorisation/DFIA/EPCG holder status, EOU Letter of Permission, ICB award/Project Authority certificate for multilateral/UN/mega-power/nuclear projects), proof of direct supply to the designated entity, and bank realisation/payment proof. For GST refund: tax invoice, GSTR-1/3B extracts, recipient undertaking (if supplier claims), and FORM GST RFD-01 with statement of invoices.
Are deemed exports eligible for RoDTEP?
No. RoDTEP (and ROSCTL) apply to physical exports where goods leave India and eBRC is generated. Deemed exports are domestic supplies; they are eligible for FTP Chapter 7 benefits — Advance Authorisation/DFIA, Deemed Export Drawback and refund of terminal excise duty for Schedule 4 goods — and for GST refund under Section 147/Rule 89, not RoDTEP scrolls.
Are supplies to SEZs deemed exports?
No. Supplies to an SEZ developer/unit for authorised operations are zero-rated supplies under Section 16(1) IGST Act and can be made without payment of tax under LUT/bond. Deemed exports are a separate FTP concept (Chapter 7) and a separate GST notification (48/2017). A supply to an SEZ is zero-rated; a deemed export to an EOU/EHTP/STP/BTP or Advance Authorisation holder is taxable then refundable.
What is the difference between deemed exports and SEZ supplies?
SEZ supplies are zero-rated, may use LUT/bond, and the supplier claims refund of unutilised ITC or IGST paid. Deemed exports are taxable supplies (Table 3.1(a) not 3.1(b)), cannot use LUT/bond, and refund is of tax paid on the supply itself under Rule 89/Section 54. SEZ benefit is under IGST Act; deemed-export GST benefit is under CGST Act Section 147.
Can deemed exports be made without physical movement outside India?
That is the definition — goods do not leave India. FTP 7.01: transactions where goods supplied do not leave the country and payment is in Indian rupees or free foreign exchange, provided goods are manufactured in India and fall under para 7.02 categories (a)–(g). Movement is domestic, to the designated project/agency/holder's site.
What are the latest rules for deemed exports in 2026?
FTP 2023 Chapter 7 (goods manufactured in India, categories a–g, para 7.02) as issued by DGFT and HBP 2023 Chapter 7 (procedure ANF-7A, common conditions 7.07–7.08) remain the governing policy for fresh claims. DGFT amended ANF-7A and Chapter 7 via Public Notice 25/2025-26 to streamline filing, but categories and core benefits — Advance Authorisation/DFIA, Deemed Export Drawback and terminal excise duty refund — are unchanged. For GST, Notification 48/2017-Central Tax (four categories) and Rule 89/Circular 17/2017 & 24/2017 continue to apply.
Are supplies to EOU/EHTP/STP/BTP always deemed exports?
For FTP, yes — supply of goods to EOU/STP/EHTP/BTP is para 7.02(b). For GST, supply to EOU is one of the four notified deemed-export categories, but the EOU/EHTP/STP/BTP unit must be the eligible recipient and goods must be manufactured in India. Supplies to SEZ (different scheme) and services are not covered; deemed export notifications cover goods only.
What is the time limit for the GST refund on deemed exports?
FORM GST RFD-01 must be filed before expiry of two years from the date the return relating to the deemed-export supply is to be furnished electronically, with invoice number/date and prescribed evidences. Acknowledgement is issued if complete, and DGFT RA processes FTP refunds (drawback/TED) within 30 days of final approval letter — interest at 6% p.a. on delay beyond 30 days from approval.