Which payment terms should an Indian service exporter use with foreign clients?

Payment terms are a commercial choice between you and your client. Indian law does not tell a designer in Pune or an agency in Kochi whether to ask for half the fee upfront or payment a month after the invoice. It does set two outer limits that every term must respect: the foreign exchange rule on when export money must reach India, and the GST rule on when an LUT export stops being tax-free if unpaid.¹⁶

This guide explains the common payment terms used in export of services and how each one fits those limits under the rules in force in October 2026.¹³ For the contract wording side, see payment terms in freelance contracts.

What are export payment terms for service exporters?

Export payment terms are the agreed date and structure by which a foreign client pays an Indian service exporter, and service exporters mostly use five structures.¹² The rules apply to each in the same way: the realisation clock starts on the invoice date.¹²

FEMA and GST do not require or prefer any of these terms. The agreed due date, plus a margin for delays, needs to fall comfortably within nine months of the invoice date.²

Who do the rules on export payment terms apply to?

The rules on export payment terms apply to every Indian exporter of services, and the GST part applies to those who export under a Letter of Undertaking (LUT).¹⁶

The same limits apply whatever the size of the business.

How do you set an export payment term for a foreign client?

You set an export payment term by choosing a structure that suits the client and then checking that its due date sits well inside the realisation and GST limits.¹³⁵

1. Pick full advance, part advance, net days, milestones or a retainer to suit the client, the job size and your cash position.
2. Make sure the due date, plus a margin for delays, falls well within nine months of the invoice date, or twelve months for rupee invoices.²
3. For a continuous supply of services, issue the invoice on or before the payment due date or milestone; for other services, within 30 days of supply.³⁵
4. Write the due date in plain words, the currency and the payment details on the invoice.
5. Follow up early on late payments and ask your AD bank for an extension before the realisation deadline passes.¹

Use the export invoice format or the export invoice generator when you write the invoice.

Which deadlines apply to export payment terms?

Three deadlines limit export payment terms: nine months for foreign-currency invoices, twelve months for rupee invoices, and the rule 96A limit for LUT exports.¹²⁶

The figures above come from the 2026 Regulations as amended and the CGST Rules.¹²³⁶

• Regulation 5: from 1 October 2026, the full export value of services must be realised within nine months from the date of the invoice, or twelve months where the export is invoiced or settled in Indian rupees.¹² Your authorised dealer (AD) bank can extend this period on a reasoned request.¹
• Rule 96A: if you supply under an LUT without paying integrated tax (IGST), and payment in convertible foreign exchange (or rupees where RBI permits) is not received within one year from the invoice date, or the period allowed under FEMA including any extension the RBI permits, whichever is later, you must pay the tax with interest within 15 days after that period, unless the Commissioner allows a further period.⁶ This wording was substituted by Notification No. 12/2024-Central Tax of 10 July 2024.⁶

What happens if a foreign client misses the export payment term?

If a foreign client misses the export payment term, the realisation deadline keeps running from the invoice date, so you need to follow up early.²

• Extension: if payment will not arrive within nine months, ask your AD bank for an extension under regulation 5 before the deadline passes.¹
• GST under an LUT: rule 96A makes IGST with interest payable after its limit.⁶
• Repeat default: if proceeds stay unrealised for more than one year after the due date, regulation 13 says further exports may be made only against full advance payment or an irrevocable letter of credit.¹

The full process, including partial payments and write-offs, is in what to do when a foreign client is not paying.

How do advance, net-days, milestone and rupee terms fit the export rules?

Advance, net-days, milestone and rupee terms all fit the export rules, with small differences in routing, invoicing and the realisation period.¹²⁵

How does an advance payment from a foreign client fit the export rules?

An advance payment from a foreign client is permitted, and the 2026 Regulations deal with it in regulation 10. The advance and the later realisation must be routed through the same AD bank, unless the change is intimated to both banks.¹ If the agreement provides for interest on the advance, regulation 10(4) caps it at the all-in-cost ceiling for trade credit.¹ For a tutor selling a block of sessions or a copywriter taking on a new client, an advance is common. See advance payment against exports and GST on advances from foreign clients.

How long a credit period is safe on a net-days export payment term?

A net-days term is safe if the due date leaves several months of headroom before the nine-month realisation deadline.² Net 30 or net 60 does this easily. Very long terms, such as net 180, leave little margin for a late payer, a disputed invoice or a returned wire.

For example, a marketing consultant invoices a London client on 5 November 2026 on net 60 terms. Payment is due in early January 2027. The realisation deadline under regulation 5 is nine months from 5 November 2026, so there are about seven months of buffer if the client pays late.²

How do milestone and recurring export payment terms interact with GST invoicing?

Milestone and recurring terms change when the GST invoice must be issued, while the realisation rule stays the same. Section 2(33) of the CGST Act defines a "continuous supply of services" as one provided under a contract for more than three months with periodic payment obligations.⁵ For such supplies, section 31(5) says the invoice is issued on or before the payment due date if the contract fixes it, or on or before completion of the event where payment is linked to an event.⁵ For other services, rule 47 gives 30 days from the date of supply.³ Each invoice then starts its own nine-month realisation clock.¹² See milestone payments in export contracts and retainer and subscription billing.

Does the currency of an export payment term change the realisation period?

The currency of an export payment term changes the realisation period. A foreign-currency invoice must be realised within nine months; an invoice raised or settled in Indian rupees gets twelve months under the first proviso to regulation 5.¹² For the export to count as an export of services under GST, payment must be in convertible foreign exchange, or in rupees wherever RBI permits (section 2(6) of the IGST Act).⁴ See invoicing exports in INR and pricing freelance services in USD.

What are the common mistakes with export payment terms?

The common mistakes with export payment terms are leaving too little headroom and leaving the due date vague.²³

• Very long terms: net 180 or similar leaves little margin before the nine-month deadline.²
• Vague due dates: rule 46 of the CGST Rules does not list payment terms among the mandatory fields, but it does require the export endorsement and the recipient's name, address and country of destination; a clear due date and invoice reference helps the bank match the remittance.³
• Late extension requests: ask the AD bank for an extension before the deadline passes.¹
• Forgetting the LUT limit: an unpaid LUT export can make IGST with interest payable under rule 96A.⁶

Which term suits you depends on the client, the size of the job and your cash position. If a contract is large or unusual, have a chartered accountant or lawyer review it once.