Yes—an Indian SaaS subscription can qualify as an export of services, but only when all five conditions in the IGST Act are satisfied. A customer’s overseas billing address is not enough by itself. You must establish where the supplier and recipient are located, apply the correct place-of-supply rule, receive payment in convertible foreign exchange, and ensure the transaction is not between establishments of the same legal person.
When the test is met, the supply is zero-rated. A registered supplier may either export under a Letter of Undertaking (LUT) without charging IGST and seek a refund of eligible unutilized input tax credit (ITC), or pay IGST and claim a refund of that IGST. The refund application is filed electronically in FORM GST RFD-01 with invoice and bank-realisation evidence.
As an Amazon Associate I earn from qualifying purchases.
The five conditions that make SaaS an export
CBIC’s sectoral FAQ treats an export of service as a cumulative test. Every condition below must be met; satisfying four out of five does not create export status.
Recommended Free Tools
| Condition | What it means for SaaS | Evidence to retain |
|---|---|---|
| Supplier located in India | The entity or person making the SaaS supply is established in India. | GST registration and legal-entity records. |
| Recipient located outside India | The contracting customer, not merely a foreign payment processor or billing address, is outside India. | Executed contract, customer legal details, address and onboarding records. |
| Place of supply outside India | The IGST Act’s place-of-supply rules must put the service outside India. | Contract terms, service description and analysis of any special rule. |
| Payment in convertible foreign exchange | Consideration must be received in a currency that qualifies as convertible foreign exchange under the applicable rules. | Bank statement, Foreign Inward Remittance Certificate (FIRC) or Bank Realisation Certificate (BRC), and remittance reference. |
| No distinct-establishment supply | The Indian supplier and overseas recipient cannot be establishments of the same person for this purpose. | Corporate-structure chart, ownership records and inter-company agreement. |
Keep the contract, customer-location evidence, tax invoice, ledger entry and remittance trail together. If a foreign address conflicts with the contract, user entity, or payment records, the address alone will not prove export treatment.
#1 Best Overall
How place of supply is determined for a SaaS subscription
Normal business-to-business or business-to-consumer SaaS
For services that do not fall under a listed exception, section 13 of the IGST Act generally places the supply where the recipient is located. That is the starting point for an ordinary subscription to software hosted or delivered online to an overseas customer. If the recipient’s location cannot be determined in the ordinary course of business, the default shifts the place of supply to the supplier’s location in India. In that situation, the export test fails because the place of supply is not outside India.
Intermediary arrangements
An Indian company that arranges or facilitates another person’s supply may be an intermediary rather than the principal SaaS supplier. CBIC states that intermediary services use the supplier’s location as their place of supply. An Indian intermediary therefore generally cannot treat its facilitation fee as an export merely because the underlying customer or principal is abroad. Review the contract, who controls the service, who bears performance risk and whose account the customer is buying before applying the normal SaaS rule.
Branches and establishments of the same person
Section 8 of the IGST Act treats establishments of the same person as distinct establishments for specified purposes, but supplies between them do not satisfy the export definition. Circular 161/17/2021-GST states that a supply by an establishment of a foreign company in India to another establishment of that company outside India is not an export of services. A transfer of staff, technology or support between a company’s Indian office and its overseas branch therefore requires a different GST analysis from a sale to an unrelated foreign customer.
Do these 3 things before closing this tab:
1Clear out junk files and repair common Windows errors2Scan for outdated or missing drivers - takes under a minute3Repair Windows errors before they cause bigger problemsCloud and data-hosting contracts
Circular 232/26/2024-GST indicates that cloud and data-hosting arrangements require a specific contractual and functional analysis. The label “SaaS” does not settle the result. Map what is supplied, who operates the infrastructure, who has the customer relationship, where the recipient is established and whether any part of the arrangement is an intermediary or another specially treated service.
Can you invoice an overseas customer without charging IGST?
Yes, if the supply is a zero-rated export and the registered supplier furnishes a valid LUT before exporting without payment of IGST. Zero-rating is different from an exemption: the supplier can preserve eligible ITC and seek a refund under the relevant route.
| Route | What appears on the transaction | Refund sought | When it is commonly used |
|---|---|---|---|
| LUT or bond route | Export without payment of IGST. | Eligible unutilized ITC attributable to zero-rated supplies. | Recurring exports where the business wants to avoid funding IGST on each invoice. |
| IGST-paid route | IGST is paid on the export. | Refund of the IGST paid on eligible exports. | Situations where the exporter does not use an LUT or prefers the tax-paid route. |
The route does not cure a failed export test. If the recipient is actually in India, the place of supply is in India, payment does not meet the foreign-exchange requirement, or the parties are distinct establishments, zero-rating and the associated refund claim are unavailable on that basis.
How to furnish an LUT for SaaS exports
The GST Portal’s published workflow uses FORM GST RFD-11 for the Letter of Undertaking. Portal labels can change, so confirm the financial year and current requirements when filing.
PC Slower Than It Used to Be?
A free scan shows the junk files, broken settings and background clutter dragging Windows down - then fixes them in one click.Free scan · Windows 10 & 11Crashes, No Sound, or Screen Glitches?
Random freezes, missing sound and display glitches usually trace back to one bad driver. Find and replace yours safely.Free scan · under a minute- Sign in at gst.gov.in. Use the registered taxpayer account of the exporting entity.
- Open Services > User Services > Furnish Letter of Undertaking (LUT).
- Select the relevant financial year. Do not assume that an LUT selected for one financial year automatically covers another.
- Upload the previous LUT where the portal asks for it. Keep the accepted copy and its acknowledgement available for the export file.
- Accept the declarations. Check that the legal name, GSTIN and authorised signatory details are correct before submission.
- Enter two independent and reliable witnesses. Record their required particulars exactly as requested by the portal.
- File and save the ARN and accepted LUT. Store the acknowledgement with contracts, invoices and remittance evidence.
Submit the LUT before relying on export without payment of IGST for the applicable period. Because portal screens and document requirements can be revised, check the live instructions rather than copying an old screenshot or prior-year workflow.
Refund process in FORM GST RFD-01
Documents and reconciliations
Export-of-services refund claims are filed electronically in FORM GST RFD-01. The refund rules require invoice number and date statements and the relevant BRCs or FIRCs for export-of-services claims. Assemble the following before starting the application:
- Export invoices mapped to the customer contract and service period.
- Proof of the recipient’s location and the contractual service description.
- BRCs or FIRCs showing receipt of the export consideration.
- GSTR-1 and GSTR-3B reporting that agrees with the invoices.
- Electronic-credit-ledger ITC records and the Net ITC used in the calculation.
- LUT acknowledgement, if the claim is for unutilized ITC under the LUT route.
Reconcile invoice values, exchange conversions, credit notes, advances, return disclosures and bank evidence before submission. A mismatch can lead to a deficiency memo, a reduced sanction or a request for clarification.
Formula for an LUT-based unutilized-ITC refund
The rules prescribe this formula:
Refund = (turnover of zero-rated goods + turnover of zero-rated services) × Net ITC ÷ adjusted total turnover.
What’s actually slowing this PC down?
Pick the symptom - the matching free tool is one click away.
| Term | Practical meaning |
|---|---|
| Turnover of zero-rated services | Eligible export-of-services turnover for the relevant period, calculated under the refund rules. |
| Net ITC | The eligible input-tax credit taken during the relevant period, subject to the rule’s definition and exclusions. |
| Adjusted total turnover | The turnover denominator specified by the refund rules for that period. |
For services, export turnover includes payments received during the relevant period, completed export services for which payment was received in an earlier period, and the subtraction of advances for services not completed during the relevant period. Use the rule-based period calculation, not simply the value of invoices raised in the month.
What happens after filing
RFD-01 generates an acknowledgement and the claim can be examined against return data, invoice statements, ITC records and bank-realisation documents. Keep the workings that connect each figure in the formula to the underlying ledger and return. If the tax officer identifies missing information, respond with the requested records and a revised reconciliation within the prescribed process.
GST rate: why the 18% figure needs qualification
CBIC’s 2017-era sectoral FAQ lists an 18% rate for IT services. That figure is relevant when the supply is taxable in India; it does not replace or relax the five-part export test. Classification, rate notifications and procedural rules can change, so confirm the rate applicable to the specific service and tax period before choosing the IGST-paid route or calculating a domestic supply.
Common failure points and how to correct them
| Failure point | Why it causes trouble | Corrective action |
|---|---|---|
| Only a foreign billing address is retained | The address does not establish the legal recipient or place of supply. | Retain the signed contract, customer entity details, onboarding checks and correspondence identifying the recipient. |
| Recipient location is unclear | If location cannot be determined in the ordinary course, the place of supply may default to India. | Obtain reliable recipient-location information before invoicing and document how it was verified. |
| Indian entity acts as an intermediary | Intermediary services use the supplier’s location as place of supply. | Analyse functions and contracts; separate a principal SaaS supply from a facilitation fee where the facts support that distinction. |
| Supply is between overseas and Indian establishments of one person | Such a transaction is excluded from the export definition. | Map the legal entities and establishments, then apply the distinct-establishment rules before claiming zero-rating. |
| Payment evidence is missing or incomplete | Receipt in convertible foreign exchange is a statutory condition and BRC/FIRC evidence is required for the refund claim. | Obtain the bank certificate, match it to invoices and explain netting, chargebacks or payment-aggregator entries. |
| LUT is for the wrong financial year or was never accepted | Export without payment of IGST depends on a valid LUT process. | Check the selected year, file through the portal, and retain the ARN and accepted LUT. |
| RFD-01 figures do not reconcile | Invoice data, returns, ITC and bank receipts support different totals. | Reconcile GSTR-1, GSTR-3B, sales ledger, credit ledger and BRC/FIRC data before filing. |
| Advances are counted as completed service turnover | The formula adjusts for advances relating to services not completed in the relevant period. | Track advances separately and include them only as permitted by the refund rule. |
A practical decision sequence for each overseas subscription
- Identify the contracting recipient. Confirm the legal customer and whether it is independent of the Indian supplier.
- Classify the function. Decide whether the Indian entity supplies its own SaaS or merely arranges another person’s supply.
- Determine place of supply. Apply section 13’s recipient-location rule unless a special rule or unavailable-location default applies.
- Verify payment mechanics. Ensure consideration will be received in convertible foreign exchange and can be tied to invoices.
- Select the tax route. Use an accepted LUT for export without IGST, or pay IGST and claim the tax-paid refund.
- Build the evidence file. Keep contract, recipient-location proof, invoice, return reporting, ledger ITC and BRC/FIRC together.
- Calculate and file. For an LUT claim, apply the rule’s turnover-and-Net-ITC formula in RFD-01; for an IGST-paid claim, reconcile the IGST paid to the export invoices.
Examples that show where the result changes
Unrelated overseas customer
An Indian SaaS company contracts directly with an unrelated company located abroad. The recipient can be identified, the service is the company’s own software subscription, the place of supply is outside India under the normal rule, and payment arrives in convertible foreign exchange. If the documentation supports each point, the transaction can qualify as a zero-rated export.
Free tools Windows power users keep installed
One-click scans. No signup required.
Indian office supporting its foreign branch
An Indian establishment provides software support to an overseas branch of the same company. Even though the branch is abroad and payment may move through a foreign bank account, the distinct-establishment condition is not met. The transaction cannot be treated as an export on that basis.
Indian platform arranging another provider’s service
An Indian entity contracts to connect customers with a separate overseas provider and earns a facilitation fee. If its role is intermediary, the intermediary place-of-supply rule points to India, so the facilitation fee does not receive export treatment merely because the end customer is overseas.
Records to retain for the statutory period
Maintain a file that lets an auditor or tax officer trace the complete chain from supply to refund:
- Customer contract, order form and amendments.
- Evidence identifying the recipient’s establishment and location.
- Service description and analysis supporting the place-of-supply treatment.
- Tax invoices, credit notes and subscription-period records.
- LUT, ARN and portal acknowledgements, where applicable.
- GSTR-1 and GSTR-3B extracts supporting the reported exports.
- Bank statements plus matching BRCs or FIRCs.
- ITC ledger, refund workings and the RFD-01 submission.
The strongest file demonstrates all five export conditions independently; it does not rely on a single field such as a country code or billing address.
Quick Recap
Product prices and availability are accurate as of the date/time indicated and are subject to change. Any price and availability information displayed on Amazon at the time of purchase will apply.
