How does GST apply to export of services from India?

Most Indian freelancers, agencies and consultants who bill clients abroad do not add GST to their invoices. GST law treats a qualifying export of services as a "zero-rated supply": tax is charged at nil on the output, and you keep the right to claim input tax credit (ITC) on what you spent to deliver it.⁴

Zero-rating only applies when every legal condition is met, and only when you follow one of two procedures.¹⁴ This guide covers both, plus what to keep on file and what goes wrong. The law described here is as of October 2026.

What is GST on export of services?

GST on export of services is charged at nil, because section 16(1) of the Integrated Goods and Services Tax (IGST) Act lists export of services as a zero-rated supply.⁴ Section 16(2) lets you claim ITC for making zero-rated supplies, even if the supply would otherwise be exempt. That is the key difference from an exempt supply, where related ITC is blocked.⁴

• Output tax: nil on a qualifying export.⁴
• Input tax credit: available on the costs of making the export.⁴
• Procedure: a registered exporter uses an LUT or pays IGST and claims a refund.⁴

For a video editor buying software subscriptions, or an agency paying GST on rent and freelancer fees, this means the GST paid on those costs is not a dead cost. It can be used, or refunded.

Who does GST zero-rating on export of services apply to?

GST zero-rating applies to a supplier whose service meets all five conditions in section 2(6) of the IGST Act, 2017:¹

• Condition (i), supplier: the supplier is located in India, supplying from an Indian place of business.¹
• Condition (ii), recipient: the recipient is located outside India, with a business or usual residence abroad.¹
• Condition (iii), place of supply: the place of supply is outside India, decided under section 13 of the IGST Act.¹
• Condition (iv), payment: payment is received in convertible foreign exchange, or in Indian rupees wherever permitted by the Reserve Bank of India (RBI).¹
• Condition (v), distinct persons: supplier and recipient are not merely establishments of a distinct person under Explanation 1 to section 8.¹

If any one condition fails, the supply is not an export. It is then normally taxable like a domestic supply.¹

Note: On 8 October 2026 the GST Council (57th meeting) recommended omitting condition (v) altogether. That needs an amendment to the IGST Act by Parliament. As of 28 October 2026 it is a recommendation only, and condition (v) still applies.¹¹

How is the place of supply decided for a foreign client?

The place of supply for a foreign client is decided by section 13 of the IGST Act, and the default rule in section 13(2) is the location of the recipient.³ So for most remote work, such as design, software development, content writing, video editing, digital marketing, consulting and online tutoring for a client abroad, condition (iii) is met. Some services have their own rules:³

• Section 13(3)(a): services on goods the client makes physically available to you, such as repairing or testing equipment, are supplied where performed.³
• Section 13(3)(b): services that need the client or their representative to be physically present with you are supplied where performed.³
• Section 13(4): services directly related to immovable property are supplied where the property is.³
• Section 13(5): admission to or organisation of events is supplied where the event is held.³
• Section 13(8): a few services are supplied at the location of the supplier; intermediary services used to be on this list, but that clause was omitted from 30 March 2026.³¹⁰ See GST on intermediary services.

How do you export services from India without charging GST?

You export services without charging GST by filing an LUT before exporting and issuing an export invoice with the rule 46 endorsement.⁴⁵¹²

1. Check the conditions: confirm all five conditions in section 2(6) are met.¹
2. File the LUT: file a Letter of Undertaking in FORM GST RFD-11 before exporting, once per financial year.⁴¹² See how to file an LUT on the GST portal.
3. Issue the invoice: within 30 days of supplying the service (rule 47), with the rule 46 export endorsement, the recipient's name and address, and the country of destination.⁵ See the export invoice format.
4. Report in GSTR-1: report export invoices in the exports table (Table 6A).⁵
5. Keep payment proof: rule 89(2)(c) asks for the Foreign Inward Remittance Certificate (FIRC) or Bank Realisation Certificate (BRC), with invoice numbers and dates, in any export of services refund claim.¹⁴ See FIRC vs FIRA vs e-BRC.
6. Claim any refund: file FORM GST RFD-01 within two years of the relevant date.⁶

Should an exporter use an LUT or pay IGST and claim a refund?

Section 16(3) and 16(4) of the IGST Act give a registered exporter two routes, and most small and mid-sized service exporters use the LUT route because it avoids paying tax and waiting for a refund.⁴

Notification No. 01/2023-Integrated Tax allows all services to use the IGST route; its exclusions cover only certain goods such as pan masala and tobacco.⁹

What documents, deadlines and rates apply to export of services under GST?

Export of services under GST runs on a nil rate, a yearly LUT, a 30-day invoice deadline and a two-year refund window.⁴⁵⁶¹²

For refunds, the relevant date for exported services is when payment is received in convertible foreign exchange (or permitted rupees) if the service was completed first, or the invoice date if you were paid in advance.⁶

What happens if a foreign client does not pay in time under an LUT?

If a foreign client does not pay in time under an LUT, you must pay the tax with interest. Rule 96A(1)(b) of the CGST Rules says that if payment is not received in convertible foreign exchange (or permitted rupees) within one year from the invoice date, or the period allowed under the Foreign Exchange Management Act, 1999 (FEMA) including any extension the RBI permits, whichever is later, or a further period the Commissioner allows, you must pay the tax due plus interest under section 50(1) of the CGST Act within 15 days after that period ends.¹³ This wording of rule 96A(1)(b) was substituted by Notification No. 12/2024-Central Tax of 10 July 2024.¹³

• Withdrawal of the LUT facility: if you do not pay, the facility to export under LUT can be withdrawn and the amount recovered; it is restored as soon as you pay. Rule 96A(3) and (4) set this out, though sub-rule (3) is worded for goods not exported in time.¹²¹³
• Extension after the fact: CBIC Circular No. 125/44/2019-GST (para 45) says the jurisdictional Commissioner may consider extending these time limits after the fact, depending on the facts, and that the same principle applies to services.⁷
• Separate FEMA timeline: the GST timeline is separate from the FEMA period for bringing money into India. See export realisation period.

How is GST on an export of services calculated?

GST on a qualifying export of services is calculated at nil under an LUT, and the rupee value of the invoice is fixed under rule 34(2) of the CGST Rules at the exchange rate set by generally accepted accounting principles on the date of the time of supply.⁴⁵ Use one consistent method.

For example, say a digital marketing consultant in Pune invoices a client in Toronto $3,000 under an LUT. The invoice is valued in rupees at the rule 34(2) rate for the time of supply and reported in Table 6A of GSTR-1, and the IGST on it is nil.⁴⁵ If the same consultant used the IGST route instead, the invoice would carry IGST at the rate for the service, paid in the return and claimed back through FORM GST RFD-01.⁴⁵ In both cases, the GST the consultant paid on business costs can be used or refunded.⁴

What changed in GST on export of services in 2026?

GST on export of services changed in 2026 through the Finance Act, 2026 and a set of GST Council recommendations.¹⁰¹¹

• 30 March 2026: the Finance Act, 2026 received assent. Its section 157 omits section 13(8)(b). It is not among the sections that wait for a notified date, so it took effect from the date of assent.³¹⁰
• 8 October 2026: the 57th GST Council meeting recommended omitting condition (v) of section 2(6), omitting section 13(3)(a), issuing a circular on receiving export payments in foreign exchange or rupees, and moving zero-rated refunds to system-based processing. These are recommendations. Check whether they have been enacted or notified before relying on them.¹¹

What are the common mistakes with GST on export of services?

The common mistakes with GST on export of services come from skipping a condition or a procedure.¹⁵⁷¹²

• Invoicing before the LUT: the LUT has to be in place before the export. CBIC allows late filing to be condoned in some cases (Circular 125/44/2019-GST, para 44), but it is discretionary.⁷
• Forgetting to renew the LUT: it is valid for one financial year only.¹²
• Billing your own foreign branch: condition (v) fails.¹
• Unpermitted payment route: getting paid through a route the RBI does not permit, or being paid abroad and never bringing the money to India, fails condition (iv).¹
• Assuming every foreign-client service is an export: check the special place-of-supply rules, especially for on-site work and work on physical goods.³
• Missing invoice details: the endorsement and country of destination are both required by rule 46.⁵
• Unmatched remittances: refund claims need invoice-wise payment proof.⁵¹⁴ Ask clients to quote your invoice number, and use the right purpose code.

How these rules apply to you depends on your contracts, how you are paid and how your business is set up. If you are unsure, confirm with a chartered accountant (CA).