Export of Services Under GST – Complete Guide to LUT, Refund & Compliance

What is Export of Services Under GST?

Export of services under GST is the supply of any service from India to a recipient located outside India, where the place of supply is outside India, and payment is received in convertible foreign currency (or in Indian rupees as permitted by RBI). It is treated as a zero‑rated supply, meaning no GST is charged to the foreign client. The supplier can either export under a Letter of Undertaking (LUT) without paying IGST, or pay IGST at the time of export and claim a refund later. Understanding this definition is critical for any Indian business or freelancer serving international clients. DisyTax has assisted over 2,000 exporters with GST compliance. Begin with our GST basic terms to build a strong foundation.

Conditions for Export of Services Under GST

To qualify as an export of services, all five conditions under Section 2(6) of the IGST Act must be satisfied:

• Supplier located in India: You, the service provider, must be in India.
• Recipient located outside India: Your client must be based abroad.
• Place of supply outside India: As per the place of supply rules, the service is deemed to be consumed outside India.
• Payment in convertible foreign currency (or permitted INR): Payment must be received in USD, EUR, GBP, etc. RBI also permits INR realization for exports to certain countries under specific arrangements.
• Supplier and recipient are not merely establishments of the same person: The two entities must be distinct legal persons.

If any condition is not met, the transaction is treated as a domestic supply, and 18% GST (or applicable rate) must be charged. Proper documentation is essential to prove export status during assessments.

GST on Export of Services

GST is not charged on the export invoice because the supply is zero‑rated. However, the exporter must comply with all GST formalities: registration, LUT filing, issuing export invoices, and reporting in GSTR‑1. If the exporter chooses the IGST route, IGST is paid at the time of export and later claimed as refund. The LUT route is preferred because it preserves cash flow. The underlying service – whether consulting, IT, design, or any other – does not change the zero‑rated nature as long as the export conditions are met. Our exports under GST guide provides comprehensive coverage.

Is Export of Services a Zero Rated Supply?

Yes, export of services is a zero‑rated supply under GST. This means the GST rate applied to the transaction is 0%. You do not collect any GST from your foreign client. As a zero‑rated supplier, you are eligible to claim a refund of the input tax credit (ITC) accumulated on your business expenses. You can choose to export under a Letter of Undertaking (LUT) without paying IGST, or pay IGST and claim a refund. The LUT route is the most common and practical method for service exporters.

LUT (Letter of Undertaking) for Export Services

An LUT is a declaration filed on the GST portal that allows you to export services without paying IGST at the time of export. It is valid for one financial year and must be filed before the first export of that year. There is no fee. Without LUT, you must pay IGST on each export invoice and claim a refund. The LUT route is highly recommended for all service exporters. DisyTax files LUTs within 24 hours. See our LUT/Bond guide for step‑by‑step instructions.

How to File LUT Under GST

Filing LUT is a simple online process:

1. Login to GST Portal – Use your GSTIN at gst.gov.in.
2. Navigate to LUT – Services → User Services → Furnish Letter of Undertaking (LUT).
3. Select Financial Year – e.g., 2026‑27.
4. Fill Declaration – Confirm no prosecution for tax evasion and commitment to export obligations.
5. Sign and Submit – Using DSC or EVC.
6. Effective Immediately – LUT is valid for the entire year.

No physical documents are required. The LUT is accepted online instantly. For detailed guidance, refer to our LUT guide.

Export Without Payment of IGST Using LUT

Once your LUT is active, you can issue export invoices without any GST. Each invoice must contain the declaration: "Supply meant for export under LUT without payment of IGST". In GSTR‑1, report the export in Table 6A with the LUT option selected. The GST portal validates the LUT automatically. You do not make any IGST payment. This preserves your working capital and allows you to claim a refund of accumulated ITC. This is the standard practice for service exporters in India.

GST Refund on Export of Services

Since exports are zero‑rated, the GST you paid on your business inputs (ITC) accumulates and can be claimed as a refund. There are two types of refunds:

• Refund of accumulated ITC: If you export under LUT, you can file Form GST RFD‑01 to claim a refund of the ITC that has piled up due to zero‑rated supplies.
• Refund of IGST paid on export: If you paid IGST on export, the refund is largely automatic based on shipping bill data (for goods) or GSTR‑1 filing (for services).

The refund process requires accurate filing of GSTR‑1, matching of export invoices, and valid bank account details. DisyTax handles end‑to‑end refund filing. Our GST refund guide explains each step.

GST Invoice Requirements for Foreign Clients

Your export invoice must contain:

• Your name, address, and GSTIN
• Client's full name and foreign address
• Invoice number and date
• Description of services, SAC code
• Value in foreign currency and INR equivalent
• Declaration: "Supply meant for export under LUT without payment of IGST"
• Country of destination

Use our GST invoice format for compliant templates. Even though no tax is collected, the invoice is a crucial legal document for audits and refunds.

FIRC/BRC Requirements for Export Benefits

FIRC (Foreign Inward Remittance Certificate) or BRC (Bank Realisation Certificate) is proof that you received payment in foreign currency. For GST refunds and audits, these documents are important. Your bank issues FIRC for each inward remittance. If you use payment platforms like PayPal, Wise, or Payoneer, you can use the transaction statements along with your bank statement showing the credit. Retain all records for at least 72 months. In the absence of FIRC, the platform's transaction proof with proper reconciliation is generally accepted.

Place of Supply Rules for Export Services

For a service to qualify as an export, the place of supply must be outside India. The default rule for B2B services is the location of the service recipient. For B2C services, specific rules apply depending on the nature of the service. For most freelancers and agencies serving foreign businesses, the place of supply is the client's country. Always verify the place of supply based on your contract and the nature of the service. Our place of supply for services guide provides detailed rules.

GST Return Filing for Export of Services

Registered exporters must file:

• GSTR‑1: Report all export invoices in Table 6A – with LUT or IGST option. Due 11th (monthly) or 13th after quarter (QRMP).
• GSTR‑3B: Report export turnover as zero‑rated supply. Claim ITC. Due 20th (monthly) or 22nd‑24th (QRMP).
• GSTR‑9: Annual return.

Even with only exports, you must file returns. Late filing attracts ₹50/day penalty. Our GST return filing guide is a helpful resource.

GSTR‑1 and GSTR‑3B Reporting

In GSTR‑1, you report each export invoice in Table 6A. For services, you can enter "999999" as port code if no shipping bill is applicable. In GSTR‑3B, report the export value under zero‑rated supplies. Claim ITC in Table 4. Accurate reporting is critical because any mismatch can delay refunds or trigger notices. DisyTax provides export‑specific return filing with reconciliation.

Input Tax Credit (ITC) on Export Services

Exports being zero‑rated, you cannot set off ITC against output tax. However, you can accumulate ITC and claim it as a refund. Eligible ITC includes:

• Laptops, computers, office equipment
• Software subscriptions, cloud services
• Internet, phone, co‑working expenses
• Professional services, advertising, marketing

File refund in Form GST RFD‑01. Our ITC guide and refund guide provide complete instructions.

Common GST Mistakes Made by Exporters

Frequently Asked Questions (FAQs)

Essential GST Resources for Service Exporters