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Repair Windows errors before they cause bigger problemsFix Now →Scan for outdated or missing drivers - takes under a minuteDriver Scan →Clear out junk files and repair common Windows errorsFree Scan →A service supplied from India to a customer abroad is not automatically an export for GST purposes. It qualifies only if it meets all five conditions in section 2(6) of the IGST Act, including the applicable place-of-supply rule and the prescribed payment condition. If it qualifies, it is zero-rated; a registered supplier may generally make the supply without payment of IGST under a bond or Letter of Undertaking (LUT) and claim a refund of eligible unutilised input tax credit, subject to the law and rules for the relevant period.
What counts as an export of services?
Section 2(6) of the Integrated Goods and Services Tax Act, 2017 (IGST Act) defines an export of services through five cumulative conditions. Each must be satisfied for the supply in question:
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- The supplier is located in India.
- The recipient is located outside India.
- The place of supply is outside India.
- The supplier receives payment in convertible foreign exchange, or in Indian rupees where the Reserve Bank of India permits payment in rupees.
- The supplier and recipient are not merely establishments of a distinct person under Explanation 1 to section 8 of the IGST Act.
A foreign customer, an invoice in foreign currency, or work delivered online does not by itself establish export status. The test applies to the particular supply and its facts. Identify the supplier and recipient establishments, what the supplier has agreed to do and actually does, where relevant people and property are located, how payment is made, and the supply date.
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How do you determine the place of supply?
Start with the cross-border default
For a service supplied to a recipient outside India, section 13(2) generally places the supply where the recipient is located. If the recipient’s location is not available in the ordinary course of business, the default is the supplier’s location. This is only the starting point: a specific rule in section 13 can displace it.
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Check whether a section 13 exception applies
Exceptions cover particular kinds of services, so classify the supply by its actual scope and circumstances rather than relying only on its invoice label. Relevant provisions include:
- Section 13(3): certain services involving goods that must be physically made available to the supplier, or requiring the recipient or a person acting on the recipient’s behalf to be physically present with the supplier.
- Section 13(4): services directly related to immovable property.
- Section 13(5): admission to, or organisation of, specified events and related ancillary services.
- Sections 13(6) and 13(7): certain supplies connected with multiple locations, including locations in India.
- Section 13(8)(b): intermediary services, for which the cited Act text places the supply at the supplier’s location.
If the applicable exception places the supply in India, the third export condition is not met—even if the customer is abroad. For example, an IT or consulting label does not decide whether a supplier is providing its own service to the overseas customer or arranging a supply between other parties. The contract, the parties’ roles, and the work actually performed matter to that characterization.
Apply the law in force on the supply date
GST treatment depends on the statutory text applicable to the transaction date. The CBIC Tax Information portal’s section 16 page records an amendment made by section 153 of the Finance (No. 2) Act, 2024, dated 16 August 2024, and also displays superseded wording. Check the operative provisions and any relevant notifications for the period before relying on a historical summary or making a filing decision.
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Repair common Windows errors and clear accumulated junk for a smoother, more stable PC - no reinstall needed.Free scan · no reinstallWhat does zero-rating mean for an export?
Section 16 of the IGST Act treats exports of services as zero-rated supplies. Zero-rating is not the same as treating a service as exempt: eligible input tax credit (ITC) can remain available, subject to statutory restrictions and the refund rules.
The amended section 16 text on the CBIC Tax Information portal describes a registered person making a zero-rated supply as eligible to claim a refund of unutilised ITC for supplies made without payment of IGST under a bond or LUT, subject to section 54 of the CGST Act and the rules. The page also shows older wording relating to payment of IGST followed by a refund. Do not assume that older general route is available for every transaction under the current law; any alternative must be supported by the applicable notified class, conditions, and law for the transaction period.
How do you make an export supply under LUT or bond?
For a supply without payment of IGST, CBIC guidance identifies a bond or LUT under Rule 96A. Treat that undertaking as one part of the compliance process, not as proof that the supply qualifies as an export or as a refund approval.
- Classify the service and confirm the five conditions. Record the relevant contract scope, recipient establishment, place-of-supply analysis, payment route, and relationship between the parties.
- Use the applicable bond or LUT process. Check the current version of Rule 96A and GST portal instructions for the financial year and supply period.
- Prepare the export invoice and report the outward supply. Follow the invoice declaration and return-reporting requirements in force for the relevant period; these are separate from the LUT filing.
- Track receipt of payment. Retain evidence of receipt and check the applicable timing requirements. A payment route or timing that does not meet the statutory condition can affect export qualification.
- Reconcile ITC and any refund claim. Keep the records supporting eligible credit, the export supplies included in the claim, and the refund calculation.
How is an unutilised ITC refund for services calculated?
CBIC’s refund rules provide a calculation framework for refunds of unutilised ITC on zero-rated supplies made without payment of tax. For services, the refund value uses payments received during the relevant period for completed supplies, adds completed supplies paid in advance in an earlier period, and subtracts advances for supplies not completed during the period.
Refund applications are made electronically in Form GST RFD-01 under the rules. The applicable rule version, documentary conditions, eligible credit, calculation details, and portal requirements should be checked for the claim period; the framework alone does not establish that a particular amount is refundable.
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What records should a freelancer or business keep?
Keep a file that allows the export test and any refund calculation to be checked against the facts, rather than relying on the invoice description alone.
- Supply and recipient: contract, statement of work, correspondence describing deliverables, recipient identity and establishment records, and evidence of the supplier’s role.
- Place of supply: facts showing where the relevant customer, goods, property, event, or participating parties were located, as applicable to the service.
- Payment: invoice, accounting records, and bank or remittance evidence showing the payment received and the route used.
- GST compliance: applicable LUT or bond records, invoices, outward-supply reporting, returns, and supporting ITC records.
- Refund working: the claim-period calculation and records for completed supplies, advances, eligible ITC, and any other required supporting documents.
How should an IT service or brokerage service be assessed?
For the question “How do I determine whether IT services provided by me constitute export of service?”, begin by identifying the actual service promised and delivered, then apply the five conditions and section 13 place-of-supply rules. Do not infer export status simply because software, support, or other work was supplied remotely to a foreign business.
Likewise, brokerage earned from clients who are not resident in India does not qualify solely because the clients are abroad. Determine what the supplier does, who receives that service, whether the supplier is acting as an intermediary, and where section 13 places the supply. The statutory classification can change the place-of-supply result.
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