Export of Services

Export of Services is one of the most important concepts for Indian freelancers, IT companies, consultants, and agencies that work with overseas clients. Under the GST framework, export of services is classified as a zero-rated supply — meaning GST is charged at 0%, and the supplier is still eligible to claim a refund of the Input Tax Credit (ITC) accumulated on their inputs.

What Qualifies as Export of Services?

As per Section 2(6) of the IGST Act, 2017, a supply is treated as export of services only if all five of the following conditions are met:

1. The supplier is located in India
2. The recipient is located outside India
3. The place of supply is outside India
4. The payment is received in convertible foreign exchange (or Indian rupees where permitted by RBI)
5. The supplier and recipient are not merely establishments of the same entity

If any one condition is not met, the transaction will not qualify as an export of services and may be treated as a taxable domestic supply instead.

GST Treatment — Zero-Rated Supply

Exports of services are zero-rated supplies under Section 16 of the IGST Act. This means:

• No GST is charged on the export invoice
• The supplier can still claim a refund of ITC on inputs, input services, and capital goods used for providing the exported service
• The export invoice must clearly mention: "Supply meant for export on payment of integrated tax" or "Supply meant for export under LUT without payment of integrated tax", depending on the route chosen

Two Routes for Exporting Services Without GST

Route 1 — LUT (Letter of Undertaking)

The most common route. The supplier files a LUT (Letter of Undertaking) on the GST portal and then issues export invoices without charging any GST. They can later claim a refund of the ITC accumulated on their inputs.

This is preferred because it avoids blocking working capital in upfront GST payments.

Route 2 — Pay IGST and Claim Refund

The supplier charges IGST on the export invoice, pays it to the government, and then applies for a GST refund. This route is less popular due to cash flow impact but is sometimes used when the LUT process is delayed.

FEMA Compliance

To qualify as an export of services under GST, payment must also comply with FEMA regulations — it must be received through an Authorised Dealer (AD) bank in convertible foreign exchange. The bank then issues a FIRC (Foreign Inward Remittance Certificate), which is the key proof required when filing a GST refund claim.

Reporting Exports in GST Returns

Export of services must be reported in:

• GSTR-1: Under Table 6A (Exports) with details of the export invoice, foreign currency amount, and shipping bill (if applicable)
• GSTR-3B: Under the "Zero-rated supply" row

Common Examples of Export of Services

• A freelance developer in Bengaluru building a website for a US-based client
• An Indian digital marketing agency running ad campaigns for a UK brand
• A chartered accountant in Mumbai providing tax advisory to an NRI client abroad
• A software company in Pune delivering a SaaS product to European customers

Place of Supply for Export of Services

The place of supply for services exported to overseas recipients is generally treated as outside India, which is what triggers the zero-rating. Getting the place of supply right is critical — an incorrect determination can convert an export (0% GST) into a taxable domestic supply.

Export of services is one of the most tax-efficient categories under GST. With the LUT route, Indian service exporters pay zero GST and still recover all input taxes — making it highly advantageous for freelancers and IT businesses working with international clients.

Invoicing an overseas client? Use JetInvoice's free GST Invoice Generator to create export invoices in the correct format — with LUT reference, foreign currency support, and zero-GST marking built in.