Genuine exports of services can be zero-rated under Indian GST — but the definition has specific conditions, and most exporters use a Letter of Undertaking to avoid paying tax upfront.
Last updated: June 2026
For a service to qualify as a genuine export (and therefore be zero-rated), several conditions must all be met: the supplier must be located in India, the recipient must be located outside India, the place of supply must be outside India, payment must be received in convertible foreign exchange (or Indian Rupees where permitted by RBI), and the supplier and recipient must not simply be establishments of the same legal entity. Missing any single condition means the supply doesn’t qualify as an export for GST purposes.
Rather than paying IGST on export supplies and then claiming a refund (a slower process), most exporters file a Letter of Undertaking (LUT) on the GST portal, which lets them export services without paying IGST upfront at all. The LUT is generally valid for one financial year and needs to be renewed annually. This is the standard, recommended route for freelancers and consultants regularly exporting services.
Zero-rated export supplies let you still claim Input Tax Credit on related business costs, unlike exempt supplies which generally don’t allow ITC claims. This is a meaningful practical difference — exporters with an LUT can claim ITC on their expenses and, where ITC exceeds output liability, apply for a refund.
Generally not, if the supply genuinely qualifies as an export under all the required conditions — payment in foreign exchange, recipient located outside India, and the other criteria.
You can still export, but you’d need to pay IGST upfront on the export supply and then separately claim a refund — a slower and more cash-flow-intensive process than exporting under an LUT.
Yes, export of services still counts as part of your aggregate turnover for registration threshold purposes, even though it’s zero-rated and no GST is actually charged.
Payment must generally be in convertible foreign exchange, though RBI permits certain Rupee payment arrangements to still qualify — check current provisions if this applies to you.
Generally one financial year — you need to file a fresh LUT for each new financial year to continue exporting without paying IGST upfront.
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