How do you export services by paying IGST instead of filing an LUT?

Most Indian service exporters use a Letter of Undertaking (LUT) and never pay tax on foreign invoices. But some end up on the other route: they forgot to file the LUT before invoicing, they are not eligible for one, or they prefer to pay IGST and recover it. This guide explains that route, called "export with payment of tax" on the GST portal, step by step.¹⁷

It also clears up the October 2023 change, which is often described as ending the IGST route. For services, it did not. The rules are stated as of October 2026, including refund-process changes notified on 26 October 2026.²¹⁰

What is export of services with payment of IGST?

Export of services with payment of IGST is the zero-rated route where a registered exporter charges and pays IGST on the export invoice, then claims that IGST back as a refund, instead of exporting under an LUT without tax.¹⁷

What changed in the IGST-paid export route from 1 October 2023?

The legal basis of the IGST-paid export route changed on 1 October 2023, and services kept the option.¹²

• Before: section 16(3)(b) of the IGST Act let any registered person supply goods or services on payment of IGST and claim a refund of that tax.¹
• Substitution: section 123 of the Finance Act, 2021 substituted section 16(3) and (4), with effect from 1 October 2023 under Notification No. 27/2023-Central Tax.¹
• Section 16(3) now: covers only exports under bond or LUT, with a refund of unutilised input tax credit.¹
• Section 16(4) now: lets the Government notify a class of persons, and a class of goods or services, that may make zero-rated supplies on payment of IGST and claim a refund.¹
• Notification No. 01/2023-Integrated Tax: (31 July 2023, effective 1 October 2023) notifies "all goods or services" as the class that may be exported on payment of IGST, except goods listed in its table: pan masala, various tobacco products and certain mint essential oils.²
• Notification No. 05/2023-Integrated Tax: (26 October 2023) amended it, with effect from 1 October 2023, to add suppliers to SEZ developers and units as a notified class.³

So a consultant, designer, developer or agency exporting any service can still pay IGST and claim it back. The restriction bites only on the listed goods.²

Who uses the IGST-paid route for export of services?

Service exporters use the IGST-paid route when no LUT was in place, when they are not eligible for one, or when they prefer a cash refund of IGST.⁹¹¹⁵

For example, a translation agency invoices a German client on 3 April before filing its LUT for the new year. See LUT renewal and validity.⁹

How do you claim the IGST refund on an export of services?

You claim the IGST refund on an export of services by filing FORM GST RFD-01 on the GST portal; rule 89(1) of the CGST Rules excludes only refunds of IGST paid on goods exported out of India from this form, so service exporters always use RFD-01.⁵ The steps, from the portal manual and FAQs:⁷⁸

1. Start: go to Services > Refunds > Application for Refund and select Export of Services with Payment of Tax.
2. Create: choose the tax period and create the application.
3. Statement 2: download the offline utility and fill in each invoice, debit note or credit note, the tax paid and the Bank Realisation Certificate (BRC) or Foreign Inward Remittance Certificate (FIRC) number and date. One invoice can have several BRCs or FIRCs, and one BRC or FIRC can cover several invoices.⁷
4. Validate: upload the statement and click Validate. The portal checks it against your GSTR-1 data.⁷
5. Documents: upload supporting documents: up to 10 files of up to 5 MB each.⁷
6. File: select the bank account for the refund from those in your registration, preview, and file with a digital signature certificate (DSC) or electronic verification code (EVC). The portal issues an ARN.

The full process and timelines are in GST refund on export of services.

What goes on an export of services invoice when IGST is paid?

An export of services invoice where IGST is paid carries IGST at the applicable rate and the endorsement required by the export proviso to rule 46 of the CGST Rules:⁶

SUPPLY MEANT FOR EXPORT/SUPPLY TO SEZ UNIT OR SEZ DEVELOPER FOR AUTHORISED OPERATIONS ON PAYMENT OF INTEGRATED TAX

It must also show the recipient's name and address, the address of delivery and the country of destination.⁶ Whether you collect the IGST from the foreign client is a commercial question. Many exporters bill the foreign-currency amount and bear the IGST themselves until the refund arrives. For the other fields, see the export invoice format.

How do you report and pay IGST on an export of services?

You report IGST on an export of services in the export details of GSTR-1 with the tax amount, and show the tax on zero-rated supplies in Table 3.1(b) of GSTR-3B.⁷

• Right table: the refund claimed cannot exceed the tax paid in Table 3.1(b).⁷
• Returns filed: the portal checks that you have filed the applicable returns, and the latest GSTR-3B for the period or invoices you claim for, before it lets you file the refund.⁷⁸

What documents and deadlines apply to the IGST refund on export of services?

The IGST refund on export of services must be filed within two years from the relevant date under section 54(1) of the CGST Act, with the documents listed in rule 89(2) and CBIC Circular 125/44/2019-GST.⁴⁵⁹

Notification No. 05/2026-Central Tax shortens the acknowledgement period and has the common portal generate the provisional order, from 1 November 2026.¹⁰

What happens if an exporter gets the IGST refund process wrong?

If an exporter gets the IGST refund process wrong, the refund can be blocked or delayed, most often because the tax was reported in the wrong GSTR-3B table.⁷

• Wrong GSTR-3B table: the GST portal FAQs warn that putting the tax in Table 3.1(a) or 3.1(c) instead of 3.1(b) causes problems when you file the refund.⁷
• Missed time limit: the portal displays a disclaimer that it does not validate the two-year time limit, so tracking it is your responsibility.⁸
• Reused invoice: an invoice used in one refund application is locked and cannot be used again, unless the application is withdrawn or a deficiency memo is issued.⁸
• Double claim: a refund of unutilised credit is barred where IGST paid on those supplies is refunded.⁴

How is the IGST refund on an export of services calculated, and how does it compare with an LUT?

The IGST refund on an export of services is the IGST you paid on the export invoices, with up to 90 per cent available provisionally, rather than a formula-based share of your input credit.¹⁴⁵

• For example: say a consultant paid ₹18,000 of IGST on export invoices for a quarter (an illustrative figure). The refund claimed is ₹18,000, and section 54(6) allows up to 90 per cent, ₹16,200, to be refunded provisionally.⁴
• Cap: the refund claimed cannot exceed the tax paid in Table 3.1(b) of GSTR-3B.⁷

It is mainly a cash-flow question: under this route you pay IGST first and wait for the refund.¹

What are the common mistakes on the IGST-paid export route?

The common mistakes on the IGST-paid export route come from the 2023 change and from portal reporting.¹⁷

• Thinking the route ended: the October 2023 change kept the route open for every service.¹²
• Wrong endorsement: using the LUT wording when IGST is paid.⁶
• Wrong table: reporting the tax outside Table 3.1(b) of GSTR-3B.⁷
• Late claim: filing after two years from the relevant date.⁴⁸
• Missing BRC or FIRC: leaving Statement 2 without realisation details.⁵⁷

For most freelancers and small agencies, filing an LUT at the start of every financial year is simpler. Keep this route for the cases above, and talk to a chartered accountant (CA) if you are choosing between the two for a large contract.