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An Indian clinical research provider may be able to make an eligible export of services without charging IGST under a Letter of Undertaking (LUT) or bond and claim a refund of eligible unutilized input tax credit (ITC), or pay IGST and claim a refund of that tax. The service must meet every statutory export condition; an overseas customer or international study alone does not make it an export.
First establish whether the service qualifies as an export
Under the IGST Act, a service is an export only when all five conditions are met for the transaction:
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- 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 Indian rupees where the Reserve Bank of India permits it.
- The supplier and recipient are not merely establishments of the same person under the Act’s distinct-person rule.
Apply these tests to the actual contract and performance, not just the invoice address or the fact that a study has international sites. Identify who contracted for the work and receives its deliverables, who directs or benefits from it, where the relevant recipient is located, how and in what currency payment is made, and whether the parties are establishments of the same person.
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A corporate-group relationship by itself does not automatically defeat export treatment. CBIC Circular 161/17/2021-GST clarifies the distinct-person condition for certain supplies by Indian subsidiaries, sister concerns, or group concerns to a foreign company. The parties’ exact legal relationship and the transaction still need to be assessed.
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Clinical research work is not one automatic GST category
The official materials do not classify every clinical trial management, data management, monitoring, laboratory, pharmacovigilance, or research-support service as an export. The contractual scope, actual recipient, place-of-supply rules, payment, and other statutory conditions determine the result. Do not assume that every service connected with an overseas sponsor qualifies.
Choose the applicable zero-rating refund route
For an eligible zero-rated service, the two broad routes are different in their cash-flow and refund mechanics:
| Route | How it works | What to weigh |
|---|---|---|
| LUT or bond, without payment of IGST | Supply the eligible service without paying IGST upfront, then claim a refund of eligible unutilized ITC. The refund is calculated under the applicable Rule 89 formula and restrictions; it is not automatically a reimbursement of every tax amount on purchases. | Available eligible ITC, working capital, purchase and invoice records, and how the rule calculates service-export turnover for the claim period. |
| Payment of IGST | Pay IGST on the zero-rated supply and claim a refund of the tax paid, subject to the conditions and safeguards applicable to the transaction and method. | The ability to fund IGST while awaiting a refund, applicable restrictions, and reconciliation of tax paid with export invoices and returns. |
Neither route is universally better. The choice depends on the supplier’s eligible credits, cash position, transaction facts, and applicable restrictions. The route must be available for the relevant supply and period under the rules then in force.
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The refund rules direct electronic claims through the common GST portal using FORM GST RFD-01. For service-export claims, the rules identify export invoice numbers and dates and relevant Bank Realisation Certificate (BRC) or Foreign Inward Remittance Certificate (FIRC) details as supporting information. CBIC Circular 125/44/2019-GST explains the electronic refund process and remittance-evidence requirement for service-export claims.
- Confirm the export treatment. Review the contract, statement of work, amendments, recipient, place of supply, payment terms, and distinct-person relationship against the five statutory conditions.
- Confirm the route and claim period. Determine whether the eligible supply is made under LUT or bond without IGST, or with IGST payment, and apply the rules relevant to that transaction period.
- Reconcile the records. Match export invoices and return reporting with the relevant BRC/FIRC evidence, eligible ITC records, and supporting purchase and tax invoices.
- File and retain support. Submit the applicable electronic RFD-01 claim with the required invoice and remittance details, and retain the underlying records supporting eligibility and calculation.
Service exporters should use the applicable RFD-01 process and current GST portal instructions. Do not substitute goods-export shipping-bill refund workflows for a service-export claim.
What determines the refund amount under the LUT route?
A claim for refund of unutilized ITC on zero-rated exports without payment of tax is subject to Rule 89’s formula and conditions. It is not simply the total GST shown on all purchases multiplied by export invoices. The calculation uses eligible “Net ITC,” adjusted total turnover, and the rule’s definition of zero-rated service turnover, among other requirements.
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For service turnover, the rule accounts for payments received during the relevant period and completed services for which payment was received in advance, less advances for services not completed during that period. Finance teams therefore need to reconcile the claim period’s service completion and payment facts as well as invoices and credits.
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Records to prepare before filing
- GST registration and applicable transaction-period tax records.
- Executed contracts, statements of work, amendments, and evidence of the actual deliverables and recipient.
- Export invoices and the corresponding export reporting in returns.
- Relevant BRC/FIRC or other required remittance details for the service-export claim.
- Purchase and tax invoices supporting eligible ITC, plus reconciliations of credits and turnover used in the claim.
- Records substantiating payment terms, service completion, advances, and the refund period used in a Rule 89 calculation.
Common mistakes to avoid
- Treating a foreign sponsor, foreign-currency invoice, or international study as conclusive proof of an export without testing all statutory conditions.
- Assuming clinical research services as a whole have a single automatic classification.
- Assuming every tax amount paid on inputs is refundable under the LUT route, without applying eligible-ITC and Rule 89 requirements.
- Using a goods-export workflow for a service claim or filing without reconciling invoice and remittance evidence.
- Relying on older general processing-time statements as a promise of when a particular refund will be paid. No fixed processing date can be inferred for an individual service-export claim from the general rules described here.
When to get transaction-specific advice
Seek advice from an Indian GST professional familiar with cross-border services where the contract names both Indian and overseas entities, a group company performs or receives part of the work, the place of supply is uncertain, the payment route is unusual, or the scope combines several research services. The statutory export test and refund calculation are applied to the specific arrangement and claim period.
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The legal and administrative materials summarized here were checked on 7 October 2026. Verify amendments, notifications, portal instructions, and transaction-period requirements before filing.
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