Last reviewed: 28 October 2026. By NRAM & Co., Chartered Accountants, Hyderabad (ICAI FRN 023031S).
In short: Services supplied from India to clients abroad are usually treated as exports and zero-rated under GST. Most exporters file a Letter of Undertaking (LUT) each year so they can invoice without charging GST, then claim refunds of the GST they paid on their own costs.
When a service counts as an export
A supply of services is an export under GST when all of these conditions are met:
- The supplier is located in India.
- The recipient is located outside India.
- The place of supply is outside India under the GST place-of-supply rules.
- Payment is received in convertible foreign exchange, or in Indian rupees where the Reserve Bank of India permits.
- The supplier and recipient are not merely establishments of the same legal person, such as a branch and its head office.
An Indian subsidiary billing its foreign parent generally meets these conditions, because the two are separate legal entities. The place-of-supply rules need checking for some services, such as those performed on goods or connected with property in India.
Two ways to export
- Under a Letter of Undertaking (LUT): file an LUT on the GST portal at the start of each financial year, then issue export invoices without charging IGST. This is the common route because no tax money is blocked.
- With payment of IGST: charge IGST on the export invoice, pay it, and then claim a refund of that IGST.
Refund of input tax credit
Exporters under an LUT pay GST on their own inputs and services, such as rent and software, but collect no GST from foreign clients. The accumulated input tax credit can be claimed as a refund by filing a refund application for the relevant period, with the export invoices and proof of foreign exchange receipts.
Practical points
- Renew the LUT before issuing the first export invoice of each financial year.
- Mention on the invoice that the supply is meant for export under LUT without payment of IGST.
- Keep foreign inward remittance records for every export invoice.
- Report export invoices correctly in the monthly or quarterly GST returns.
How NRAM & Co. can help
We register exporters for GST, file the annual LUT, prepare export invoices and returns, and file refund claims for accumulated input tax credit. See Tax Services, or email info@nramco.com.
This article is general information, not advice for any specific situation. Indian tax, GST and FEMA rules change often; check the current position with a professional before acting.