TaxTMI 
TaxTMI 
Whether input tax credit (ITC) reversal is required under GST laws in case goods are exported free of cost (FOC) without any consideration by Indian Company.
ITC is required to be reverse in case of export of Goods outside India on FOC basis.
25 Feb 2026 
7 Replies 
2238 Views Asked by
Zero-rated supply: FOC exports to related parties do not require ITC reversal; unrelated disposals may require reversal.
FOC exports taken out of India qualify as zero-rated when they constitute a supply; transfers to related or distinct persons fall under Schedule I and therefore attract zero-rated treatment with no ITC reversal, subject to compliance. FOC disposals to unrelated persons that do not amount to a supply are treated as non-supply gifts or samples and require reversal of attributable ITC. Exporters must follow bond/LUT or IGST payment/refund routes, maintain export documentation, and apply valuation/open market value rules to support zero-rated status. (AI Summary)
FOC exports taken out of India qualify as zero-rated when they constitute a supply; transfers to related or distinct persons fall under Schedule I and therefore attract zero-rated treatment with no ITC reversal, subject to compliance. FOC disposals to unrelated persons that do not amount to a supply are treated as non-supply gifts or samples and require reversal of attributable ITC. Exporters must follow bond/LUT or IGST payment/refund routes, maintain export documentation, and apply valuation/open market value rules to support zero-rated status. (AI Summary)