Centre removes GST export refund threshold under Section 54(14); awaits Gazette notification

As a matter of relief for the exporters, The Union government has approved the minimum cap for granting GST refunds on goods exported with payment of tax under section 54(14) of the Central Goods and Services Tax (CGST) Act, 2017. This means that refund claims of integrated tax on exported goods cannot be rejected merely because the amount is below a fixed minimum limit once this comes into force. The amendment shall come to effect from the date to be specified separately by the Central Government through a notification in the Official Gazette.

At present, section 54(14) operates as a statutory bar on small refund claims. It provides that no refund under sub‑sections (5) or (6) of section 54 shall be paid if the amount is below ₹1,000 base for processing refunds. For exporters dealing with high‑volume, low‑value consignments, such as e‑commerce parcels, product samples, handicrafts and small batch exports, this has meant that IGST paid on many export transactions, though legally refundable in principle, has not been released in practice because each individual claim fell short of the threshold. Over time,this led to the accumulation of small amounts which are unrecoverable which together constituted significant working‑capital drain.

The approved change is narrowly and specifically focused on export refunds. The payment threshold condition under section 54(14) will not be applied to goods exported with payment of tax. In effect, export‑related refund claims are being carved out from the minimum‑amount restriction, so that tax officers cannot deny refund of IGST on exported goods solely on the ground that the claim amount is below ₹1,000 or any other prescribed floor.

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All other safeguards built into the refund framework remain intact: exporters must still file refund applications within the statutory time limit, provide supporting documentation such as export invoices, shipping bills, proof of IGST payment and proof of export, and may continue to be subject to risk‑based verification or scrutiny where risks are flagged. Only the quantitative bar, for this specific category of refunds, is being removed; the legal tests of eligibility and genuineness of the export remain unchanged.

Legally, the amendment is shaped to come into force “on such date as the Central Government may, by notification in the Official Gazette, appoint.” This clarifies that the change is not self‑executing from Budget day.

First, the amendment must be enacted as part of the Finance Act for the relevant year, following passage of the Finance Bill by Parliament and Presidential assent. Thereafter, a separate commencement notification must be issued, specifying the exact date from which the modified section 54(14) will apply to export‑related refunds. Until that appointed date is notified, the existing provision remains in force and authorities are expected to continue applying the prevailing threshold when processing refund claims, including those linked to exports.

The subject‑specific impact is evident in the export segment. For micro, small and medium exporters, online sellers and businesses using courier and postal channels, the earlier threshold often together made a steady amount: each shipment generated a small IGST component, individually too low to qualify for refund but cumulatively meaningful over months and years.

The removal of the threshold for export refunds is designed to unlock this trapped liquidity, improve cash‑flow positions and ensure that the principle of zero‑rating is fully realised even for low‑value consignments. It also reduces the need for artificial practices such as holding back claims or clubbing multiple periods purely to cross the ₹1,000 mark.

From a systems and administration standpoint, implementation will require corresponding adjustments in GST and customs platforms. Refund modules on the GST portal and back‑end systems will need to be reconfigured so that export‑related refund claims below the earlier minimum are no longer automatically blocked or flagged solely because of their size.

It is expected that detailed instructions will be issued to field formations clarifying that, from the notified date, all admissible IGST refunds on goods exported with payment of tax must be processed without applying any minimum‑value cut‑off, subject to the usual legal and procedural checks. These instructions are also likely to address treatment of pending claims and provide guidance on how to handle cases where part of the claim period falls before and part after the notified date.

Exporters, in turn, will need to ensure that even small‑value export transactions are properly documented and reflected in refund applications. Businesses that previously ignored small refund amounts because they fell below the threshold may now need to update internal systems to track such amounts invoice‑wise, capture them in periodic refund applications, and retain all supporting evidence.

For advisory and compliance teams, the change will also require updating internal guidance, client notes and standard operating procedures to reflect that no minimum amount bar will apply to IGST refunds on exports once the amended section 54(14) is brought into force.

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