What counts as export of services under GST and under FEMA?

"Export of services" means one thing to your GST return and something wider to your bank. The Goods and Services Tax (GST) definition decides whether you can invoice without tax. The Foreign Exchange Management Act, 1999 (FEMA) decides what you must declare to your bank and by when the money must arrive.¹⁶

This guide sets the two definitions side by side, explains why they can give different answers for the same invoice, and shows what each one makes you do. The law is stated as of October 2026.¹⁶

What is export of services under GST and FEMA?

Export of services under GST is a supply that meets all five conditions in section 2(6) of the IGST Act, while under FEMA it is the "provision of services from India to any person outside India".¹⁵

What is the GST definition of export of services?

The GST definition of export of services is in section 2(6) of the Integrated Goods and Services Tax (IGST) Act, 2017: a supply of service is an "export of services" only when all five conditions are met.¹

1. Supplier: the supplier of service is located in India.
2. Recipient: the recipient of service is located outside India.
3. Place of supply: the place of supply of service is outside India.
4. Payment: the supplier has received payment in convertible foreign exchange, or in Indian rupees wherever permitted by the Reserve Bank of India (RBI).
5. Relationship: the supplier and recipient are not merely establishments of a distinct person under Explanation 1 to section 8.¹²

"Location" has its own definitions. Section 2(14) and 2(15) of the IGST Act tie location to the registered place of business, a fixed establishment, the establishment most directly concerned, or, failing these, the usual place of residence.¹ The place of supply is decided by section 13 of the IGST Act, which for most remote services is the location of the recipient.³ See place of supply for export of services.

What is the FEMA definition of export of services?

The FEMA definition of export of services sits inside the general definition of "export": section 2(l) of FEMA defines "export", with its grammatical variations, to mean the taking out of India of goods and the "provision of services from India to any person outside India".⁵

• Service: section 2(zb) defines "service" as service of any description made available to potential users, with examples such as banking, legal assistance, processing and the purveying of news or other information.⁵
• Exclusions: it excludes services rendered free of charge and services under a contract of personal service.⁵
• Software: the FEMA (Export and Import of Goods and Services) Regulations, 2026 (the 2026 Regulations), in force from 1 October 2026, add that "services" includes "software".⁶

The 2026 Regulations do not add a place-of-supply test or a list of conditions like the GST one.⁶

Who counts as an exporter of services under GST and FEMA?

Who counts as an exporter of services depends on where the work is done, how the client pays and who the client is, and most remote services meet both definitions.¹³⁵

For example, a marketing agency running ads for a UK retailer and a tutor teaching students in Singapore online will usually meet both definitions.¹³⁵

How do you check whether a service counts as an export under GST and FEMA?

You check whether a service counts as an export by testing the five GST conditions before invoicing, then following the FEMA steps when the payment is due.¹⁶

1. Location: confirm you are located in India and the client is located outside India, using the section 2(14) and 2(15) tests.¹
2. Place of supply: apply section 13 of the IGST Act.³
3. Payment: make sure payment will arrive in convertible foreign exchange, or in rupees only where the RBI permits.¹
4. Relationship: confirm the client is not your own branch or head office abroad.¹²
5. Obligations: apply the GST and FEMA obligations separately.¹⁶

If you are unsure, start with the export of services checker.

What obligations and deadlines apply under GST and FEMA to an export of services?

The obligations under GST and FEMA are independent, and meeting one set does not satisfy the other.¹⁶

• GST: if the supply is an export and you are registered, you either file an LUT and invoice without IGST, or pay IGST and claim a refund.¹ If the supply is not an export, you charge GST like any other taxable supply. See how to file an LUT and export of services without an LUT.
• EDF: from 1 October 2026 the 2026 Regulations require an Export Declaration Form (EDF) to the specified authority, usually your authorised dealer (AD) bank, within 30 days from the end of the month in which you raised the invoice. Exporters of services other than software may instead submit it on or before the date payment is received. One EDF can cover all exports in a month.⁶
• Realisation: realise and repatriate the full export value within nine months from the invoice date, or twelve months if the export is invoiced or settled in Indian rupees.⁶
• Shortfalls: if you cannot realise the full value, ask your AD bank to extend the period (regulation 5) or reduce the export value (regulation 6). For invoices up to ₹10 lakh, a reduction can be allowed on your declaration.⁶
• LUT payment deadline: under rule 96A of the CGST Rules, an exporter under a Letter of Undertaking (LUT) must pay the tax with interest if payment is not received within one year of the invoice date, or the FEMA realisation period including any RBI-permitted extension if that is later, or a longer period the Commissioner allows.⁴

See EDF for service exporters and export realisation period for the detail.

Do rupee payments count as an export of services under GST and FEMA?

Rupee payments count as an export of services for GST only where the RBI permits them, because condition (iv) of section 2(6) says "in Indian rupees wherever permitted by the Reserve Bank of India".¹ CBIC Circular No. 202/14/2023-GST (27 October 2023) clarified that export proceeds paid in rupees from a Special Rupee Vostro Account of a correspondent bank of the partner country, under the RBI's July 2022 arrangement, meet condition (iv).⁸

Under FEMA, the 2026 Regulations allow twelve months instead of nine for realising exports invoiced or settled in rupees.⁶ A rupee transfer from a client's Indian bank account, or from a friend in India paying on the client's behalf, is a different matter and may fail both tests. Ask your AD bank before accepting one.

What happens when a service is an export under FEMA but not under GST?

When a service is an export under FEMA but not under GST, the bank treats the receipt as export proceeds while GST is payable as on a domestic supply, because the GST definition is narrower.¹⁵

• Place of supply in India: section 13(3)(b) of the IGST Act puts the place of supply where the service is performed if it needs the client, or someone acting for the client, to be physically present with you.³ For example, a corporate trainer in Pune teaching a visiting German team, or a physiotherapist treating a patient from Dubai in Kochi, fails condition (iii), and GST is payable even though the client is abroad and pays in euros or dirhams.
• Work on goods: under section 13(3)(a), services on goods that the client makes physically available to you are generally taxed where performed.³ The 57th GST Council meeting recommended omitting section 13(3)(a), but that is a recommendation only.⁹
• Payment not received: condition (iv) looks at payment actually received, and under an LUT rule 96A then requires the tax with interest.⁴
• Own branch: condition (v) treats an Indian office and a foreign office of the same legal person as establishments of distinct persons, so supplies between them are not exports for GST.¹² A separately incorporated subsidiary or parent is different, as CBIC Circular No. 161/17/2021-GST explains.⁷ The 57th GST Council meeting on 8 October 2026 recommended omitting condition (v); as of 28 October 2026 it still applies.⁹

How do the GST and FEMA definitions of export of services compare?

The GST and FEMA definitions of export of services compare as a five-condition test against a single broad phrase, based on section 2(6) of the IGST Act and sections 2(l) and 2(zb) of FEMA.¹⁵⁶

What are the common mistakes with the export of services definition?

The common mistakes with the export of services definition come from assuming the bank's view settles the GST question.¹⁵

• Bank equals GST: treating a receipt as a GST export because the bank treats it as export proceeds.¹⁵
• Client abroad, work in India: ignoring section 13(3) when the client is present with you or sends goods.³
• Unpermitted rupees: accepting rupees from a client's Indian account or a friend in India.¹
• Branch billing: treating a foreign branch of the same legal person as an export client.¹²
• Treating recommendations as law: relying on the 57th GST Council recommendations before Parliament amends the Act.⁹

Whether a particular arrangement is an export under either law depends on your contracts, where the work is done and how you are paid. If you are unsure, confirm with a chartered accountant (CA) and your AD bank.