I subcontract work to another Indian freelancer for a foreign project: who charges GST?
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Short answer
The subcontractor's supply to you is a domestic supply, not an export, because you, the recipient, are located in India; if the subcontractor is GST-registered, it charges you GST under the place of supply rule in section 12 of the IGST Act.12 Your own invoice to the foreign client can still be a zero-rated export, and as a registered exporter you can use the GST you paid as input tax credit or claim it back as a refund.13 If the subcontractor is below the registration threshold and unregistered, it charges no GST.4
A Kochi web agency wins a project from a Canadian retailer and hires a Jaipur illustrator for the artwork. The agency invoices the Canadian client; the illustrator invoices the agency. Two supplies are happening, and GST treats them differently.
Is the subcontractor's invoice to me an export?
No. Section 2(6) of the IGST Act requires the recipient of the service to be located outside India.1 The illustrator's client is the agency in Kochi, so the illustrator's supply is domestic, even though the work ends up with a Canadian client.
Who charges GST on the subcontract?
The subcontractor, if it is registered. For supplies where supplier and recipient are both in India, section 12 of the IGST Act puts the place of supply at the location of a registered recipient.2 The subcontractor charges IGST if you are in a different State, or CGST and SGST if you are in the same State.
A subcontractor whose aggregate turnover is within ₹20 lakh (₹10 lakh in special category States) is exempt from registration under Notification No. 10/2017-Integrated Tax and charges no GST.4
Do I charge GST to the foreign client?
Usually not. Your invoice to the Canadian retailer is an export if all five conditions in section 2(6) are met.1 Export is a zero-rated supply under section 16.2 If you are registered, file a Letter of Undertaking and invoice without IGST with the rule 46 endorsement.3 See GST on export of services.
How do I recover the GST the subcontractor charged?
Section 16(2) lets a registered person take input tax credit on inputs used for zero-rated supplies, and section 16(3) allows a refund of unused credit when exporting under a Letter of Undertaking.2 If most of your output is exports, credit tends to build up, so the refund route matters. See refund of ITC on zero-rated supplies.
What about RBI paperwork and income tax?
Only the exporter has RBI duties. You file the Export Declaration Form with your bank and must realise the client's payment within nine months of the invoice date.5 The subcontractor is paid in rupees as a domestic vendor.
For income tax, the subcontractor's fee is your business expense if you compute actual profit, and the subcontractor reports it as its own income. If you use a presumptive scheme, expenses are not deducted separately, so ask a chartered accountant which method suits a business that passes work to others.
How did we verify this?
We checked this page against the sources below on 28 October 2026. Read our methodology or report an error.
- [1]CBIC: IGST Act, 2017, section 2 (definitions), clause (6)
- [2]IGST Act, 2017 (as amended), sections 12 and 16, Maharashtra GST Department copy
- [3]CGST Rules, 2017 (consolidated as of 24 September 2021), rule 46 (tax invoice contents and export endorsement), CBIC
- [4]Notification No. 10/2017-Integrated Tax (exemption from registration for inter-State suppliers of taxable services), GSTZen reproduction
- [5]RBI: Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026, Notification No. FEMA 23(R)/2026-RB, amended up to 22 September 2026 (regulations 3 and 5)
Frequently asked questions
Can my Indian subcontractor issue an export invoice to me?+
No. An export needs the recipient to be located outside India under section 2(6) of the IGST Act. You are the recipient, and you are in India.1
Can the subcontractor bill the foreign client directly instead?+
Yes, if the client contracts with the subcontractor for its part. That part can then be the subcontractor's own export, and your invoice covers only your share.1
Is the GST I pay my subcontractor a cost to me?+
Not if you are registered. Section 16 of the IGST Act lets you take input tax credit for zero-rated supplies and claim a refund of unused credit when you export under a Letter of Undertaking.2
Who files the EDF with the bank?+
You do, as the exporter who invoices the foreign client. The subcontractor has no export and files nothing with the bank for its domestic invoice.5
This page is general information for Indian service exporters, not tax or legal advice. Rules change and outcomes depend on your facts, so confirm with a chartered accountant before acting.
Keep reading
How does GST apply to export of services from India?
How GST works when you bill a foreign client from India: the five export conditions, LUT vs IGST refund, records to keep, payment deadlines and mistakes.
GSTHow is the refund of unutilised ITC calculated for export of services?
How exporters of services under an LUT calculate the refund of unutilised input tax credit under rule 89(4): each term defined, a worked example, and 2026-27 changes.
GSTHow do you file an LUT for export of services on the GST portal?
Step-by-step guide to filing a Letter of Undertaking in FORM GST RFD-11 for export of services: eligibility, validity, late filing and the ARN on invoices.
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An individual freelancer billing foreign clients must register for GST only above ₹20 lakh aggregate turnover. How to count it, and when registering early makes sense.