GST on Export of Services in India 2026

GST on Export of Services in India: The Complete Guide (2026)

What Is Export of Services Under GST?

Under the Integrated Goods and Services Tax (IGST) Act, 2017, the export of services is defined under Section 2(6) of the IGST Act. For a transaction to qualify as ‘export of services’, all five conditions below must be simultaneously satisfied:

The supplier of service is located in India.
The recipient of service is located outside India.
The place of supply of the service is outside India.
The payment for such service has been received by the supplier of service in convertible foreign exchange, OR in Indian Rupees wherever permitted by the Reserve Bank of India (RBI).
The supplier of service and the recipient of service are not merely establishments of a distinct person.

All five conditions must be met together. If even one condition fails, the transaction will NOT qualify as export of services and will be treated as a domestic taxable supply attracting GST.

Important Note for Freelancers:

Many Indian freelancers receive payments via PayPal, Wise, Payoneer, or direct bank wire. As long as the payment is in convertible foreign exchange and the client is located outside India, the condition of export of services is satisfied — even if you are an individual or a sole proprietor.

How Is Export of Services Treated Under GST?

Under GST law, export of services is treated as a Zero-Rated Supply under Section 16 of the IGST Act, 2017. This is a very beneficial treatment and it means:

GST is NOT charged on the invoice raised to the foreign client (0% GST rate).
You are still entitled to claim Input Tax Credit (ITC) on all your inputs and input services used for providing these exported services.
You can get a full REFUND of the unutilised ITC from the GST department.

This is completely different from an ‘exempted supply’ where ITC cannot be claimed. Under zero-rated supply, you get the best of both worlds — no GST on output and full ITC credit on inputs.

Two Routes for Exporting Services Under GST

Under GST law, an exporter of services has two options to export:

Route 1: Export Under LUT (Letter of Undertaking) — Most Preferred

Under this route, you export services WITHOUT paying IGST. You submit a Letter of Undertaking (LUT) to your GST jurisdictional officer at the beginning of every financial year. This is the most popular and cash-flow-friendly route.

No IGST is paid on export invoices.
You can claim refund of accumulated Input Tax Credit (ITC) from GST department.
LUT must be filed annually via GST portal (Form GST RFD-11).
Eligible persons: Any registered taxpayer who has not been prosecuted for tax evasion of Rs 2.5 crore or above.

Route 2: Export on Payment of IGST — With Refund Claim

Under this route, you pay IGST at the applicable rate on the export invoice. After export, you claim a refund of IGST paid. This route is less preferred because it blocks your working capital temporarily.

IGST is paid on the export invoice (e.g., 18% for IT services).
Refund of IGST paid is claimed from GST department.
Refund must be applied within 2 years from the date of export.
This route is useful when you have no ITC to carry forward.

CleverCoins Expert Tip:

In 99% of cases, Route 1 (LUT-based export) is more beneficial. It avoids IGST outflow, preserves working capital, and allows you to claim accumulated ITC as refund. We at CleverCoins help clients file their LUT online every April — get in touch to ensure you never miss it.

What Is a Letter of Undertaking (LUT) Under GST?

A Letter of Undertaking (LUT) is an undertaking given by an exporter to the GST department stating that they will comply with all export-related GST provisions and will not misuse the zero-rating benefit.

How to File LUT on GST Portal

Log in to the GST Portal (www.gst.gov.in).
Go to Services > User Services > Furnish Letter of Undertaking (LUT).
Select the Financial Year for which LUT is being filed.
Fill in the required details and upload supporting documents.
Sign digitally using DSC or EVC.
A unique ARN (Application Reference Number) is generated.

LUT remains valid for the entire financial year (April to March). For FY 2025-26, the LUT filed is valid from 1 April 2025 to 31 March 2026.

GST Registration: Is It Mandatory for Service Exporters?

This is a frequently asked question. The answer depends on your annual turnover:

Threshold Limits for GST Registration (Service Exporters):

• General States: Mandatory if aggregate turnover exceeds Rs 20 lakh per year.

• Special Category States (NE states, Jammu & Kashmir, etc.): Mandatory if turnover exceeds Rs 10 lakh per year.

• If your export income exceeds Rs 20 lakh, GST registration is compulsory — even if all your income is from exports.

• If turnover is below Rs 20 lakh, GST registration is optional. However, without registration, you CANNOT export under LUT or claim ITC refunds.

Many small freelancers earning below Rs 20 lakh from foreign clients choose to voluntarily register for GST to enjoy the benefits of ITC refund claims.

How to Raise an Export Invoice Under GST

An export invoice under GST (when exporting under LUT) must contain the following mandatory fields:

Name, address, and GSTIN of the supplier.
A consecutive serial number (not exceeding 16 characters).
Date of issue.
Name, address, and GSTIN or UIN (if applicable) of the recipient.
Name and address of the foreign client (in foreign country).
HSN/SAC code of the service (e.g., SAC 9983 for IT services, SAC 9997 for personal/professional services).
Description of services provided.
Taxable value and rate of GST — however, since it is zero-rated, write ‘0’ in IGST column.
The mandatory declaration: ‘SUPPLY MEANT FOR EXPORT UNDER LUT WITHOUT PAYMENT OF IGST’.
Invoice amount in foreign currency (USD, EUR, GBP, etc.) with INR equivalent.
Details of LUT (ARN number and date).
Bank Account details for foreign wire transfer.

GST Returns Filing for Exporters of Services

Exporters registered under GST must file the following returns:

Return	Frequency	Purpose
GSTR-1	Monthly / Quarterly	Report all outward supplies including export invoices (Table 6A for exports)
GSTR-3B	Monthly	Summary return — report zero-rated supplies, ITC claimed, and net tax payable
GSTR-9	Annual	Annual summary return — reconciliation of all GST paid/claimed during the year

Export invoices are to be reported in Table 6A of GSTR-1. This is the dedicated table for zero-rated supplies (exports). IGST column will show 0 if exporting under LUT.

How to Claim Refund on Export of Services

One of the biggest financial benefits for service exporters is the GST refund. There are two types of refund scenarios:

Type 1: Refund of Accumulated ITC (When Exporting Under LUT)

Since you are not paying IGST on export invoices, the ITC you have paid on inputs (e.g., internet, office rent, professional subscriptions, laptops, software) keeps accumulating in your GST credit ledger. You can claim this accumulated ITC as a cash refund.

File Form GST RFD-01 on the GST portal.
Select reason: ‘Refund on account of export of services without payment of tax (LUT)’.
Attach GSTR-1, GSTR-3B, bank realisation certificate (FIRC/BRC), and invoices.
Refund is processed within 60 days by the GST officer. If not processed within 60 days, interest is payable by the department.

Type 2: Refund of IGST Paid on Exports

If you exported by paying IGST, you can claim full refund of IGST paid. The refund application under Form GST RFD-01 is filed with details of IGST paid invoices.

Reverse Charge Mechanism (RCM) and Export of Services

Export of services may involve import of services as well. For example, if you use a foreign SaaS tool, foreign cloud server, or foreign consulting service for your business, you are importing a service. In this case:

You may be liable to pay GST under Reverse Charge Mechanism (RCM) as the service recipient.
RCM GST paid can be claimed as ITC (if used for taxable/zero-rated output).
RCM must be declared in GSTR-3B under Table 3.1(d) — ‘inward supplies liable to reverse charge’.

FEMA Compliance and Foreign Currency Realisation

For a service to qualify as ‘export of services’ under IGST Act, the payment must be received in convertible foreign exchange. This links GST compliance directly with FEMA (Foreign Exchange Management Act) compliance:

Payment must be realised within the time limit prescribed by RBI (generally 9 months from the date of export of services, extendable on application).
A Foreign Inward Remittance Certificate (FIRC) or Bank Realisation Certificate (BRC) is issued by your bank as proof of foreign payment receipt.
FIRC/BRC is a critical document for GST refund applications — keep it safely.
PayPal / Wise / Payoneer settlements that are converted to INR and credited to your bank also qualify — ensure you have transaction statements showing foreign currency origin.

Common Mistakes Made by Exporters of Services

At CleverCoins, we see these common errors in our client work:

Not filing LUT for the new financial year — exporting without LUT attracts IGST liability.
Raising invoices in INR for foreign clients — this may disqualify the transaction from being an ‘export’.
Forgetting to declare export invoices in Table 6A of GSTR-1.
Not realising FEMA’s 9-month payment realisation limit — delayed receipts can disqualify the export.
Missing the 2-year deadline for filing GST refund claims — this leads to permanent loss of refund.
Showing export invoices under wrong GST category in GSTR-3B — e.g., declaring under B2B domestic instead of zero-rated exports.
Not maintaining FIRC/BRC from bank — leading to refund rejection due to lack of evidence.

GST SAC Codes Commonly Used for Export of Services

SAC Code	Service Category	Examples
9983	IT & Software Services	Web development, app development, SaaS, coding
9997	Other Services	Consulting, advisory, research services
9984	Telecom & Data Services	VoIP, data centre, cloud services
9982	Legal & Accounting	Legal, CA, management consulting
9961	Retail Trade Services	E-commerce support services

GST on Export of Services vs. Export of Goods: Key Differences

Many people confuse export of services with export of goods. Here is a quick comparison:

Parameter	Export of Goods	Export of Services
GST Treatment	Zero-Rated Supply	Zero-Rated Supply
LUT Requirement	Required for goods	Required for services
Shipping Bill	Mandatory for goods	Not applicable
FIRC / BRC	Not mandatory	Critical document
Customs Involvement	Yes — mandatory	No — not required
Proof of Export	Shipping bill + EGM	Invoice + FIRC / BRC

Deemed Exports — What Are They?

Deemed exports are transactions where the goods or services do not physically leave India, but are treated as exports for the purpose of certain benefits. However, for services, deemed exports are specifically listed categories under GST, such as:

Services supplied to a Special Economic Zone (SEZ) unit or SEZ developer — treated as zero-rated supply.
Services to EOU (Export Oriented Units) may also qualify under specific provisions.

Supply of services to an SEZ unit without payment of IGST (under LUT) is one of the most common deemed export scenarios for Indian IT and consulting companies.

Practical Compliance Checklist for Service Exporters

Monthly Compliance Checklist:

• File LUT at the start of every financial year (April 1).

• Raise export invoices with correct SAC codes and LUT declaration.

• Ensure payment is realised in foreign currency within 9 months.

• Collect FIRC / BRC from your bank for every foreign receipt.

• Report export invoices in Table 6A of GSTR-1 every month.

• Declare zero-rated supplies in GSTR-3B Table 3.1(b).

• File refund application (Form GST RFD-01) quarterly for accumulated ITC.

• Maintain records of export invoices, FIRC/BRC, and bank statements for 6 years.

• Track all RCM liabilities and pay in cash if applicable.

• Reconcile GSTR-1, GSTR-3B, and books every month before filing.

Conclusion

GST on export of services offers tremendous benefits to Indian freelancers, IT companies, consultants, and service exporters. With zero-rated treatment under IGST Act, you not only avoid paying GST on your export invoices but also get to claim full refund of GST paid on your business expenses.

The key to maximising these benefits is timely filing of LUT, correct invoice preparation, proper return filing, and timely refund claims. A missed LUT or a wrongly classified invoice can convert your zero-rated export into a taxable domestic supply — attracting GST, interest, and penalties.