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1Fix the driver behind crashes, sound loss and screen glitches2Clear out junk files and repair common Windows errors3Scan for outdated or missing drivers - takes under a minuteAn export of services is one kind of zero-rated supply, but an overseas customer alone does not make a service an export under Indian GST. A business must first meet all five conditions in section 2(6) of the IGST Act. If it does, the supply falls within the broader zero-rated category and may qualify for the related input-tax-credit and refund framework, subject to its rules and restrictions.
How export of services and zero-rated supply differ
The terms describe different steps in the GST analysis. “Export of services” is a defined legal classification. “Zero-rated supply” is the broader treatment under section 16 of the IGST Act: it includes exports of goods and services, as well as qualifying supplies to an SEZ developer or unit for authorized operations.
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| Question | Export of services | Zero-rated supply |
|---|---|---|
| What does it describe? | A service meeting all five conditions in section 2(6) of the IGST Act. | A wider category under section 16 that includes exports and qualifying SEZ supplies. |
| Does a foreign customer qualify by itself? | No. The recipient’s location is only one condition; place of supply, payment, supplier location and establishment relationship also matter. | No. The supply must fall within a category covered by section 16. |
| Is it the same as exempt? | No. | No. Zero-rated treatment is distinct from exempt status and has its own input-tax-credit and refund provisions. |
For an SEZ supply, check that it is for authorized operations and that the relevant endorsement and supporting evidence are in place. A customer’s SEZ status alone does not establish that the supply qualifies.
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Section 2(6) of the IGST Act requires all five conditions to be met together. The Telangana Commercial Taxes Department’s Handbook on Refunds under GST, third edition, January 2026, states: “Thus, in order to qualify as export of service, it is mandatory to fulfil all the 5 conditions mentioned in Section 2(6) above.”
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1. The supplier is located in India
Identify the establishment most directly involved in making the supply and determine its location under the statutory rules. Do not assume that the location of a head office, invoice issuer or payment account necessarily settles which establishment is supplying the service.
2. The recipient is outside India
Identify the actual recipient and the establishment receiving the service, rather than relying only on the payer’s address or the name on the contract. The Act’s recipient-location rules consider the place of business, a relevant fixed establishment or, in the circumstances specified by the rules, the recipient’s usual residence.
3. The place of supply is outside India
This is a separate statutory condition, not a restatement of the recipient’s location. Place of supply depends on the applicable service-specific rule; special rules can apply to particular services, including intermediary services. A foreign billing address does not, by itself, establish that the place of supply is outside India.
4. Payment is received in an allowed form
The statutory wording includes payment in convertible foreign exchange or in Indian rupees wherever permitted by the Reserve Bank of India. The Telangana handbook’s January 2026 edition reproduces this wording. Do not rely on older guidance that describes receipt only in convertible foreign exchange as though it were the complete rule.
5. Supplier and recipient are not merely distinct establishments of the same person
Check the legal and establishment structure, not just the group relationship. The condition can distinguish an Indian-incorporated subsidiary from an Indian branch or office that is part of a foreign company.
Two fact-sensitive areas that can change the answer
Intermediary work versus a service supplied on the supplier’s own account
The IGST Act’s intermediary definition covers a broker, agent or other person who arranges or facilitates a supply between two or more persons, while excluding a person supplying the service on its own account. The Act also has a special place-of-supply rule for intermediary services. Characterization therefore depends on what the Indian business actually undertakes, not simply on labels such as “consulting,” “commission” or “support.”
- Identify who contracts with whom and which parties receive the underlying supply.
- Describe the Indian supplier’s actual deliverables and obligations.
- Determine whether it supplies its own service or arranges or facilitates another person’s supply.
Subsidiary versus branch or representative office
CBIC Circular 161/17/2021-GST clarifies that an Indian-incorporated company and a foreign-incorporated company are separate legal persons for the distinct-establishments condition. A service from an Indian subsidiary to its foreign parent is not disqualified solely because the parent owns the subsidiary.
The circular treats a different structure differently: an Indian branch, agency or representative office of a foreign company supplying that company’s overseas establishment is a supply between distinct establishments and does not qualify as an export under condition five. Map the actual supplier and recipient establishments before applying the clarification.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What zero-rating means for ITC and refunds
Zero-rated does not mean that a refund is automatic, that every input tax credit is refundable, or that there are no filing requirements. Input tax credit remains subject to statutory restrictions, and refunds depend on eligibility, documentation, calculation, procedure and applicable time limits.
Section 16 was amended with effect from 1 October 2023. Under the amended framework described in the Telangana Commercial Taxes Department’s January 2026 handbook, the default route for a registered person making a zero-rated supply is to supply without payment of IGST under a bond or Letter of Undertaking (LUT) and claim eligible unutilized input tax credit under section 54 and the rules. Payment of IGST followed by a refund is available only to notified classes of persons or classes of goods or services. Check the applicable notifications and eligibility for the particular supply; older summaries of two generally available routes may not reflect the amended framework.
Documents and filing for an LUT or bond claim
Refund applications for unutilized credit are made electronically in Form GST RFD-01 under the refund rules. For export-of-services claims, relevant supporting evidence includes invoice numbers and dates and Bank Realization Certificates (BRCs) or Foreign Inward Remittance Certificates (FIRCs), as applicable. Invoices must carry the prescribed endorsement for the route used. For supply under bond or LUT without payment of IGST, the endorsement is: “SUPPLY MEANT FOR EXPORT UNDER BOND OR LETTER OF UNDERTAKING WITHOUT PAYMENT OF IGST”. Align invoice details and payment-realization evidence with the refund application, and follow the applicable calculation and procedural requirements.
A practical order for reviewing a transaction
- Map the parties and establishments. Record which Indian establishment supplies the service, which foreign establishment receives it, and whether the parties are separate incorporated entities or establishments of one person.
- Classify the service actually supplied. Review the contract and deliverables to determine whether the supplier is acting on its own account or arranging or facilitating another supply.
- Apply the place-of-supply rule. Identify the rule relevant to that service, including any special rule, before treating the supply as an export.
- Confirm the payment condition. Document receipt in convertible foreign exchange or in Indian rupees where permitted by the RBI.
- Choose and substantiate the zero-rating route. For the bond/LUT route, check invoice wording, refund eligibility and records. Use an IGST-payment route only if the applicable notification covers the person or supply.
This is a general explanation of Indian GST classification and refund rules, not a determination of how a particular contract or transaction should be treated.
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