Query on Export of Services & ITC Refund - Guidance Required

[Tushar Malik]

Our client is a Delhi-based subsidiary of a foreign company. The Indian subsidiary provides IT and support services to its parent company located outside India.

For the last 3 years, the services were treated as taxable domestic supplies, and GST was paid after availing ITC.

From FY 2025-26, the company intends to treat these as Export of Services, since all conditions under Section 2(6) of the IGST Act are fulfilled, and plans to claim refund of unutilized ITC under Section 54(3) read with Rule 89(4).

Queries:

1. Whether the unutilized accumulated ITC of the previous financial year can be claimed as refund now?

2. Whether ITC paid under RCM on services imported from the same foreign parent can also be included in the refund claim?

3. What is the time limit and frequency (monthly/quarterly) for filing refund claims in case of export of services under LUT?

Any practical guidance or case references from senior professionals will be appreciated.

AI Summary

Export of services: past domestic ITC cannot be refunded by reclassification; IGST under RCM refundable; two year limit.
Accumulated ITC from past domestic taxable supplies cannot be refunded merely by reclassifying past supplies as exports. IGST paid under reverse charge on imported services is refundable subject to statutory conditions. Refund claims must be filed within two years from the relevant date. Alternatively, supplies may be made zero rated by paying IGST and then claiming refund of unutilized ITC; filing frequency (monthly or quarterly) may be chosen so long as claims fall within the two year limit. Consider whether export conditions, including receipt in convertible foreign exchange, are satisfied.