GST on Export of Services from India: Zero-Rated Supply Explained
India’s IT, consulting, design, and freelancing sectors earn substantial revenue from overseas clients. Under GST, the export of services is a zero-rated supply — but only if specific conditions are met. Get one condition wrong and the supply may be treated as taxable. This guide explains GST on the export of services from India and how zero-rating works.
What Counts as Export of Services?
Under GST, a supply qualifies as an export of services only if all five conditions are met:
- The supplier is located in India.
- The recipient is located outside India.
- The place of supply is outside India.
- Payment is received in convertible foreign exchange (or in INR where permitted by RBI).
- The supplier and recipient are not merely establishments of the same person.
If any condition fails, the supply is not an export and may be taxable.
Why Zero-Rating Matters
A zero-rated supply means the export bears no GST, yet the exporter can still claim input tax credit and a refund. This keeps Indian services globally competitive. Exporters use one of two routes — pay IGST and claim it back, or export under a LUT without paying IGST. See the mechanics in GST refund on exports.
Place of Supply for Services
The place of supply is the linchpin of export classification. For most cross-border services, the place of supply is the location of the recipient. But special rules apply to certain services (such as those related to immovable property, events, or intermediary services), which can shift the place of supply back to India and defeat the export claim.
The Intermediary Trap
If you act as an intermediary — arranging or facilitating a supply between two other parties — the place of supply is the location of the supplier (India), so the service may not qualify as an export. Many Indian service providers are caught here, so classification must be done carefully.
Foreign Exchange Realisation
To support an export claim, payment must be received in convertible foreign exchange, evidenced by a FIRC or BRC. Keep these records, as they are required for the refund.
Export of Services Checklist
| Condition | Requirement |
|---|---|
| Supplier | Located in India |
| Recipient | Outside India |
| Place of supply | Outside India |
| Payment | Convertible foreign exchange |
| Relationship | Not the same person’s establishments |
Frequently Asked Questions
Is export of services taxable under GST?
It is zero-rated — no GST is borne, and input tax credit can be refunded, provided all conditions are met.
Why might my export not qualify?
Common reasons include being an intermediary, payment not in foreign exchange, or place of supply being in India.
Do I need a FIRC?
Yes — proof of foreign exchange realisation (FIRC/BRC) is needed to support the export and refund.
Should I export under LUT or with IGST?
The LUT route avoids paying IGST upfront and is usually better for cash flow.
Export Services Without Losing the Benefit
S. Choudhary & Co. classifies your supplies correctly, files LUTs, and recovers export refunds. Explore our GST services or call +91 90248 28295 · sushil@sushilchoudhary.com.
