Taxation & Compliance
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Exporting services from India to an overseas client does not automatically qualify as an export under GST. The transaction must meet all five conditions under Section 2(6) of the IGST Act, 2017. These include the supplier being located in India, the recipient being located outside India, the place of supply being outside India, and payment being received through an RBI-permitted route.
When these conditions are met, the supply qualifies as a zero-rated supply. Eligible registered exporters can export under a Letter of Undertaking (LUT) without paying IGST upfront or, where permitted, pay IGST and claim a refund.
The regulatory framework also changed in 2026. The Finance Act, 2026 omitted the special place-of-supply rule for intermediary services, effective from 30 March 2026. Separately, the FEMA (Export and Import of Goods and Services) Regulations, 2026 introduced a revised Export Declaration Form (EDF) framework from 1 October 2026.
This guide explains the GST eligibility conditions, registration, LUT, export invoices, international payments, FEMA compliance, GST returns and refund procedures for Indian service exporters.
TL;DR
Export eligibility: All five conditions under Section 2(6) of the IGST Act must be satisfied.
GST treatment: Eligible exports qualify as zero-rated supplies. Registered exporters can generally use an LUT or the permitted IGST-paid route.
GST registration: Eligible small service providers may qualify for registration exemption, but an unregistered exporter cannot furnish an LUT or claim registered-exporter GST refunds.
Export documentation: Maintain export invoices, contracts, payment records and applicable remittance documents.
FEMA compliance: The 2026 framework generally requires service exporters to submit an EDF and realise export proceeds within the prescribed period.
GST returns and refunds: Report exports correctly in GSTR-1 and GSTR-3B and follow the applicable refund procedure.
What Qualifies as Export of Services Under GST?
Under Section 2(6) of the IGST Act, 2017, a service qualifies as an export only when all five statutory conditions are satisfied. Having a foreign customer or receiving payment in foreign currency is not sufficient on its own.
The five conditions are:
The supplier is located in India. The service must be supplied from an establishment located in India.
The recipient is located outside India. The actual recipient of the service must be located outside the country.
The place of supply is outside India. This is generally the recipient's location under Section 13(2), subject to specific exceptions.
Payment is received in convertible foreign exchange or permitted INR. The payment method must comply with the applicable RBI requirements.
The supplier and recipient are not merely establishments of the same person. Supplies between an Indian establishment and its overseas branch generally do not qualify as exports under the current provision.
For example, an Indian software developer providing development services to a UK company may qualify as an exporter if the UK company is the actual recipient, the place of supply is outside India, the payment condition is met, and the remaining statutory conditions are satisfied.
Pending GST Council recommendation: At its 57th meeting on 8 October 2026, the GST Council recommended omitting Section 2(6)(v), which concerns supplies between establishments of the same person. Until the required legal amendment takes effect, this condition continues to apply.
How is the Place of Supply Determined for Export of Services?
The place of supply determines where a service is treated as supplied under GST. Under Section 13(2) of the IGST Act, 2017, the general rule for cross-border services is that the place of supply is the recipient's location. However, certain services follow specific rules.
Type of Service | Place of Supply |
Services involving goods that the recipient makes physically available to the supplier | Where the service is actually performed. For services supplied remotely by electronic means, where the goods are located when the service is provided. |
Services supplied to an individual requiring their physical presence with the supplier | Where the service is actually performed. |
Services directly related to immovable property, including accommodation and property-related services | Where the property is located or intended to be located. |
Admission to or organisation of events, including conferences, exhibitions and sporting events | Where the event is actually held. |
Temporary import of goods for treatment or processing: Section 13(3)(a) contains an exception for certain services involving goods temporarily imported into India for repairs, treatment or processing and then exported without being put to other use in India. In qualifying cases, the general recipient-location rule under Section 13(2) applies.
The GST Council recommended omitting Section 13(3)(a) at its 57th meeting on 8 October 2026. Until the amendment takes effect, the existing provision continues to apply.
How Did the 2026 Amendment Change the Place of Supply for Intermediary Services?
Before 30 March 2026, Section 13(8)(b) prescribed the supplier's location as the place of supply for intermediary services. This often prevented Indian intermediaries providing services to overseas recipients from qualifying as exporters.
The Finance Act, 2026 omitted Section 13(8)(b) with effect from 30 March 2026. Cross-border intermediary services are now generally governed by Section 13(2), meaning the place of supply is the recipient's location unless another specific exception applies.
The definition of an intermediary under Section 2(13) remains unchanged. It covers a broker, agent or other person who arranges or facilitates a supply between two or more persons but does not make that supply on their own account.
As a result, intermediary services supplied by an Indian business to a foreign recipient can qualify as exports if all five conditions under Section 2(6) are satisfied.
Is GST Applicable on Export of Services?
Yes. GST law applies to exports, but services satisfying all five conditions under Section 2(6) of the IGST Act qualify as zero-rated supplies under Section 16. Eligible exporters can generally make these supplies without paying IGST upfront under an LUT or use the permitted IGST-paid route.
What Does Zero-Rated Supply Mean?
Under Section 16 of the IGST Act, exports of goods and services are classified as zero-rated supplies. This allows eligible exporters to claim input tax credit (ITC) on inputs and input services used to provide exported services, subject to the applicable conditions and restrictions under Section 17(5) of the CGST Act.
Zero-rated supplies are different from nil-rated and exempt supplies:
Zero-rated supplies: Exports of goods or services and supplies to SEZ units or developers for authorised operations. Eligible suppliers can claim ITC and refunds under the prescribed conditions.
Nil-rated supplies: Supplies that attract a 0% GST rate and are included within exempt supplies.
Exempt supplies: Supplies wholly exempt from GST under a notification or provision of law. This category also includes nil-rated and non-taxable supplies.
What are the Two GST Options for Exporting Services?
Section 16(3) of the IGST Act provides the LUT route for eligible registered exporters. Section 16(4) allows the government to notify the persons and goods or services eligible for the IGST-paid route.
Factor | Export under LUT | Export on payment of IGST |
IGST on export invoice | Not paid upfront | Paid at the applicable rate |
Refund route | Eligible unutilised ITC | IGST paid on the export |
Main requirement | Valid LUT and eligible ITC | Eligibility under the notified IGST-paid route |
Cash-flow impact | Avoids upfront IGST payment | Requires tax payment before the refund is received |
Notification No. 1/2023-Integrated Tax, as amended, permits eligible exports of services on payment of IGST with a refund claim, subject to the applicable conditions.
The LUT route is generally more cash-flow friendly because it avoids upfront IGST payment. The IGST-paid route may suit exporters who prefer to claim a refund of the tax paid, provided they meet the applicable conditions.
Is GST Registration Mandatory for Exporting Services?
No. GST registration is not mandatory for every service exporter from the first invoice. Eligible small service providers can claim the registration exemption if their aggregate turnover remains within the applicable threshold.
The general registration threshold for service providers is ₹20 lakh in aggregate turnover during a financial year. It is ₹10 lakh for suppliers making taxable supplies from Manipur, Mizoram, Nagaland and Tripura.
Aggregate turnover is calculated on an all-India basis for all supplies made under the same PAN. It includes taxable supplies, exempt supplies, exports of goods and services, and inter-State supplies. GST and certain inward supplies liable to reverse charge are excluded.
Although exports are inter-State supplies, Notification No. 10/2017-Integrated Tax, as amended by Notification No. 3/2019-Integrated Tax, exempts eligible small suppliers of inter-State taxable services from registration if their aggregate turnover does not exceed the applicable threshold.
However, registration is required if the exporter wants to furnish an LUT or claim GST refunds through the registered-taxpayer refund mechanisms. The exemption is subject to the conditions of the applicable notification.
How Do You File an LUT and Raise an Export Invoice?
A registered exporter who wants to export services without paying IGST upfront must furnish a Letter of Undertaking (LUT) in Form GST RFD-11 before making the export supply. The exporter must also issue an invoice with the prescribed particulars and meet the payment conditions under Rule 96A of the CGST Rules.
How Do You File an LUT on the GST Portal?
An LUT is a declaration a registered taxpayer furnishes to export goods or services without paying IGST. It is generally valid for one financial year, so you must furnish a fresh LUT for each subsequent financial year.
Follow these steps:
Visit the GST portal and log in using the registered credentials.
Go to Services > User Services > Furnish Letter of Undertaking (LUT).
Select the relevant financial year.
Complete Form GST RFD-11 and provide the required declarations and details.
Select the authorised signatory and place of filing.
Preview and verify the information.
Submit using a Digital Signature Certificate (DSC) or Electronic Verification Code (EVC), as applicable.
Download and retain the acknowledgement and Application Reference Number (ARN).
Furnish the LUT before making the export supply under this route.
What Details Should an Export Invoice Include?
A registered exporter must issue an invoice containing the particulars prescribed under Rule 46 of the CGST Rules. These generally include:
Supplier's legal name, address and GSTIN.
A unique, consecutive invoice number and invoice date.
Recipient's name and overseas address.
Description of the services supplied.
Applicable Service Accounting Code (SAC), subject to notified exemptions.
Value of services and applicable tax details.
Address of delivery and country of destination.
Other particulars required under Rule 46.
The invoice must also carry the appropriate export endorsement.
For exports under LUT without payment of IGST:
SUPPLY MEANT FOR EXPORT UNDER BOND OR LETTER OF UNDERTAKING WITHOUT PAYMENT OF INTEGRATED TAX
For exports on payment of IGST:
SUPPLY MEANT FOR EXPORT ON PAYMENT OF INTEGRATED TAX
These are the prescribed export endorsement wordings under Rule 46.
A shipping bill is generally used for exporting physical goods through Customs. It is not ordinarily required for a service export. Service exporters must separately follow the applicable FEMA declaration requirements, including EDF filing where required.
How Should You Receive International Payments for Exported Services?
Indian service exporters can receive international payments through SWIFT transfers, local collection accounts and cross-border payment platforms. The right route depends on the client's location, payment currency, available collection methods, charges and settlement requirements.
Common payment methods include:
SWIFT transfers: Overseas clients send funds to an Indian bank account through the international banking network. Intermediary or correspondent banks may deduct charges.
Local collection accounts: Payment providers may offer local account details in currencies such as USD, GBP and EUR. Clients can pay through domestic networks such as ACH, SEPA or Faster Payments, depending on the provider and country.
Cross-border payment platforms: These platforms facilitate international collections, currency conversion and INR settlement. Some also provide payment links, invoicing and transaction tracking.
Before selecting a payment route, check the supported currencies, collection methods, exchange rates, transaction fees, settlement timelines and banking arrangements. Confirm that the route provides the payment records required for reconciliation and FEMA compliance.
Which Documents Should You Maintain to Prove International Payments?
Maintain records that connect the overseas service, export invoice, incoming payment and final settlement. These may include:
Client contract or service agreement.
Export invoice.
Payment confirmation or remittance advice.
Platform transaction statement, where applicable.
Transaction fees and currency conversion details.
INR settlement or bank credit record.
FIRA, BRC, FIRC or other applicable remittance evidence.
Reconciliation of the invoice value, amount received, deductions and final amount credited.
What is FIRA?
Foreign Inward Remittance Advice (FIRA) records details of an incoming international payment. It may include the remittance amount, currency, date, sender details and transaction reference.
FIRA helps exporters reconcile payments against invoices and maintain evidence of incoming remittances. Depending on the payment route, banks or providers may issue FIRA, FIRS, FIRC, bank credit advice or other records. These documents are not necessarily interchangeable.
FIRA alone does not establish that all five conditions for an export of services under Section 2(6) are satisfied. For certain GST refund claims, the applicable rules specifically require BRC or FIRC details.
ALt: GST and FEMA compliance timeline for service exporters, covering EDF filing, payment deadlines, reconciliation and GST returns
What are the FEMA and EDF Requirements for Service Exports?
GST export eligibility and FEMA compliance are separate requirements. A service transaction may qualify as a zero-rated supply under GST but still need to meet FEMA requirements for export declarations, payment realisation and repatriation.
The Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026 came into force on 1 October 2026 and replaced the earlier 2015 regulations for transactions covered by the new framework.
What is EDF and Who Must File It?
The Export Declaration Form (EDF) is a declaration under the 2026 FEMA regulations. It records the export value of services supplied to overseas clients and enables the Authorised Dealer (AD) bank or other specified authority to monitor export proceeds.
Under the new framework:
Service exporters must generally submit EDF within 30 days from the end of the month in which the invoice is raised.
One consolidated EDF may cover services supplied to multiple overseas clients during the month.
Exporters of services other than software may submit EDF on or before receiving payment.
The AD bank may extend the filing deadline if it accepts the reasons for the delay.
The specified authority depends on the export category. For services in the Domestic Tariff Area (DTA), the AD bank is generally the specified authority. DTA software exporters may submit through the AD bank or STPI. For services exported from an SEZ, the specified authority is the Development Commissioner.
What are the FEMA Payment Realisation Deadlines?
Under the 2026 FEMA framework, service exporters must generally realise and repatriate export proceeds within:
Nine months from the invoice date for services invoiced in foreign currency.
Twelve months where the export is invoiced and/or settled in Indian rupees, subject to the applicable provisions.
An AD bank may extend the period if it accepts the exporter's reasons for the delay.
Rule 96A of the CGST Rules also sets a payment condition for exports made under LUT. Following Notification No. 12/2024-Central Tax dated 10 July 2024, the exporter must receive payment within one year from the invoice date or the period permitted under FEMA, including any RBI-approved extension, whichever is later.
If payment is not received within the applicable Rule 96A period, the exporter must pay the tax due along with applicable interest within 15 days after that period expires. The Commissioner may allow a further period.
Can Service Exporters Receive Payments Through Third Parties?
Yes. Regulation 8 of the 2026 FEMA regulations allows an AD bank to permit third-party receipts and payments for export and import transactions if it is satisfied about the bona fides of the transaction.
The exporter should maintain the client contract, export invoice, payment confirmation, platform transaction records and settlement details to establish the connection between the exported service and the payment.
Using a third-party payment platform or collection account does not automatically remove the exporter’s FEMA reporting obligations. The applicable route and documentation should be confirmed with the AD bank.
Are Individual Service Providers Exempt from EDF Reporting?
On 7 October 2026, the RBI Governor clarified that individuals providing services in a personal capacity, such as tutoring or small software services, are not required to report these transactions under the new framework.
However, this clarification is not expressly included in the written regulations. Individuals operating through a registered business or proprietorship should confirm their reporting requirements with their AD bank rather than assume that the clarification automatically covers their business structure.
How Do You Report Export of Services in GSTR-1 and GSTR-3B?
Registered service exporters must report eligible export supplies in their GST returns, including exports made under LUT without payment of IGST. GSTR-1 captures invoice-level export details, while GSTR-3B reports the aggregate value of zero-rated outward supplies.
GST Return | Table | What to Report |
GSTR-1 | Table 6A | Export invoices, including exports of services |
GSTR-1 | Table 6B | Supplies to SEZ units or developers |
GSTR-1 | Table 6C | |
GSTR-3B | Table 3.1(b) | Outward taxable supplies that are zero-rated |
Ordinary exports of services to overseas clients belong in Table 6A of GSTR-1, not Table 6C. Report eligible zero-rated supplies in Table 3.1(b) of GSTR-3B.
For exports under LUT, report the taxable value without paying IGST on the export supply. For eligible exports made on payment of IGST, report the taxable value and applicable IGST amount.
Before filing, reconcile the invoice details and values reported in GSTR-1 with the zero-rated supply figures declared in GSTR-3B. Check invoice numbers, dates, taxable values, amendments, credit notes and debit notes. Differences between returns and refund application details can cause validation issues or delay eligible refund claims.
How Do You Claim a GST Refund on Export of Services?
Eligible service exporters can claim a GST refund through two routes. Exporters using an LUT can claim eligible unutilised input tax credit (ITC), while exporters paying IGST can claim a refund of the tax paid, subject to the applicable rules.
How Is the Refund of Unutilised ITC Calculated?
Under Rule 89(4) of the CGST Rules, the maximum refund for zero-rated supplies made under LUT is calculated using the prescribed formula.
For a claim relating only to exported services: Refund amount = (Turnover of zero-rated services × Net ITC) ÷ Adjusted Total Turnover
The components mean:
Turnover of zero-rated services: Payments received during the relevant period for exported services, plus payments received earlier for services completed during that period, less advances received for services not completed during that period.
Net ITC: Eligible ITC on inputs and input services during the relevant period, subject to the exclusions under Rule 89(4).
Adjusted Total Turnover: The turnover calculated under Rule 89(4), using the prescribed State or Union Territory turnover and service turnover, subject to specified exclusions.
Example:
Particular | Amount |
Turnover of zero-rated services | ₹10,00,000 |
Net ITC | ₹1,00,000 |
Adjusted Total Turnover | ₹20,00,000 |
Maximum refund under the formula | ₹50,000 |
This is an example calculation, not a guaranteed refund. The admissible amount depends on eligible ITC and the applicable rules.
Upcoming capital-goods change: The amendment to Rule 89 notified in October 2026 provides for eligible ITC on capital goods to be included in the zero-rated supply refund calculation from 1 April 2027. The credit will be attributed over 60 months and will remain subject to the prescribed conditions. Until then, capital-goods ITC is excluded from Net ITC under the existing formula.
How Do You Claim a Refund of IGST Paid?
An eligible exporter who pays IGST on exported services can apply for a refund of the tax paid under Section 54 of the CGST Act and the applicable refund rules.
The exporter files the application electronically in Form GST RFD-01, and the department processes it under Rule 89. The exporter must meet the conditions of the applicable IGST-paid route and provide the required supporting details.
What Documents are Required and What is the Refund Time Limit?
The documents depend on the refund route. Generally, exporters should maintain:
Export invoices and a statement of invoice numbers and dates.
Relevant BRC or FIRC details as payment evidence, where required.
LUT acknowledgement for refunds claimed under LUT.
GSTR-1 and GSTR-3B return details.
Purchase invoices and ITC records supporting the claim.
Other declarations and documents required under Form GST RFD-01.
Under Section 54(1) of the CGST Act, you must generally file a refund application within two years from the relevant date.
For refunds relating to exported services where tax has been paid, Explanation 2(c) provides that the relevant date is the date payment is received in convertible foreign exchange or permitted Indian rupees if the service was completed before payment. If payment was received in advance, the relevant date is the date the invoice was issued.
The relevant-date provision differs for refunds of unutilised ITC. Consider Explanation 2(e) along with the applicable statutory provisions and judicial interpretation. The Delhi High Court's April 2026 decision discussed this distinction. Exporters should not automatically apply the payment-receipt date to every unutilised ITC refund claim.
Before filing, check for incorrect invoice details, GSTR-1 and GSTR-3B mismatches, missing BRC/FIRC details, invalid LUT details, ineligible ITC, errors in the Rule 89(4) calculation and limitation-period issues.
How Can a Cross-Border Payment Platform Support Service Exporters?
A cross-border payment platform helps service exporters collect international payments, convert foreign currencies, track transactions and access remittance documentation. It simplifies payment operations but does not replace the exporter's GST, FEMA or banking compliance responsibilities.
Service exporters should compare platforms based on:
Country and currency support: Payment routes for the countries and currencies in which clients operate.
Collection methods: Local collection accounts and SWIFT transfers, depending on the supported payment corridor.
Transparent pricing: Clear currency conversion rates, transaction fees and other charges.
Settlement timelines: Expected timelines for receiving funds in an Indian bank account.
Payment tracking: Transaction updates and records for reconciliation.
Remittance documentation: Access to FIRA or other relevant payment documents issued by the authorised bank.
Banking arrangements: Clarity on the banking partners handling collection and settlement.
How Does Infinity Support International Payments for Indian Service Exporters?
Infinity, a cross-border payment platform from Scalifi Wealth Pvt. Ltd., helps eligible Indian businesses and independent professionals receive and manage international payments.
With Infinity, exporters can:
Receive payments in supported currencies through eligible local collection routes.
Convert foreign currency into INR and withdraw funds to an Indian bank account.
Track incoming payments and access transaction details.
Obtain FIRA documentation issued by an RBI-authorised bank for eligible transactions.
Create invoices and payment links for overseas clients.
Simplify international payment collection with Infinity. Explore Infinity's international payment services to check available currencies and payment options.
Frequently Asked Questions About Export of Services Under GST
1. Is an LUT mandatory for every service exporter?
No. An LUT is required when an eligible registered exporter wants to export services without paying IGST upfront. It is not mandatory for every service exporter. An exporter using the permitted IGST-paid route follows the applicable tax-payment and refund procedure instead.
2. Is a supply to an SEZ unit considered an export of services?
A supply of services to an SEZ unit or developer for authorised operations is a zero-rated supply under Section 16 of the IGST Act. However, it is treated separately from an export of services under Section 2(6). The supplier must meet the applicable SEZ documentation and GST requirements.
3. What is the difference between export of services and deemed exports?
Export of services involves supplying services from India to a recipient outside India, subject to Section 2(6) of the IGST Act. Deemed exports, under Section 147 of the CGST Act, relate to specified supplies of goods that are treated as exports even though the goods do not leave India. Services are not classified as deemed exports under this provision.
4. Is FIRA mandatory for every export of services?
No. FIRA is useful evidence of an incoming international payment, but it is not a universal GST requirement for every service export. For relevant GST refund claims, Rule 89(2)(c) requires BRC or FIRC details as applicable. FIRA should not automatically be treated as a substitute for these documents.
5. Can an exporter correct an invoice if IGST was charged by mistake?
The correction depends on the circumstances and whether the tax has already been paid. Where legally permitted, an exporter may issue a credit note and report it in the applicable GST return within the prescribed time. Any refund of tax already paid must follow Section 54 and the applicable refund conditions.
6. Can an Indian exporter outsource part of a service contract to an overseas vendor?
Yes. Under CBIC Circular No. 78/52/2018-GST, the full contract value can qualify as an export of services if the conditions under Section 2(6) of the IGST Act are met. The outsourced portion is treated as an import of services by the Indian exporter and is generally subject to IGST under reverse charge.
If the overseas client pays the foreign vendor directly, that amount can still count as export consideration, provided the Indian exporter pays the applicable reverse-charge IGST and the RBI permits the consideration to be retained outside India through a general instruction or specific approval.
