GST Registration for Export of Services in 2026: Conditions, LUT & Refund

Key Takeaways

• Section 2(6) of the IGST Act treats a service as an export only when the supplier is in India, the recipient is outside India, the place of supply is outside India, payment is received in convertible foreign exchange, and both parties are not establishments of the same person.
• Exports count as inter-state supplies under Section 7 of the IGST Act, which triggers compulsory registration under Section 24 of the CGST Act. The ₹20 lakh threshold does not usually protect exporters.
• Section 16 allows exports to carry a nil tax rate, while exporters still retain Input Tax Credit and refund eligibility. Exempt supplies, in contrast, block ITC.
• Exporters file an LUT in Form RFD-11 to supply services without paying IGST upfront. This helps them claim ITC refunds and avoid blocking working capital under the IGST payment route.
• Exporters report exports in Table 6A of GSTR-1 at zero tax and match them with GSTR-3B. They then file Form RFD-01 with FIRC or BRC proof. 
• Report the foreign-currency invoice value in rupees using the exchange rate on the invoice date. Record both values on the invoice for clean reconciliation.

What Qualifies as Export of Services Under GST?

Section 2(6) of the IGST Act, 2017, defines export of services under GST. A service qualifies as an export only when:

• The service supplier is located in India.
• The service recipient is located outside India.
• The place of supply must be outside India.
• The business must receive payment in convertible foreign exchange or in Indian rupees wherever the RBI permits it.
• The supplier and recipient do not merely operate as establishments of the same person, such as branch offices of the same company in different countries.

If a business fails to satisfy even one of these conditions, GST does not treat the supply as an export. Instead, it gets treated as a regular taxable service, and the supplier must charge applicable GST, usually at 18%.

For example, an Indian software developer may build an app for a US-based client and receive payment in US dollars. GST treats this transaction as an export of services if it satisfies all prescribed conditions.

Is GST Registration Mandatory for Export of Services?

Export of services qualifies as an inter-state supply under Section 7 of the IGST Act. Although Section 24 of the CGST Act generally mandates GST registration for inter-State taxable supplies, the government provides relief to small service exporters.

As a result, service exporters do not need GST registration if:

• Their aggregate turnover stays within the prescribed threshold limit (₹20 lakh in most states and ₹10 lakh in special category states), and
• They do not make any taxable supplies in India that trigger compulsory registration.

Even below the threshold, many service exporters voluntarily obtain GST registration for export of services, as it helps them:

• File a Letter of Undertaking (LUT)
• Export services without charging GST
• Claim Input Tax Credit (ITC) refunds
• Work with foreign clients who prefer GST-compliant vendors

For instance, a freelance graphic designer in India who works only with overseas clients may not require GST registration if annual turnover stays below the threshold. However, voluntary registration still helps the freelancer file LUTs and claim ITC refunds.

GST Rate for Export of Services

Section 16 of the IGST Act treats export of services as a zero-rated supply. Unlike regular domestic services, exporters do not need to charge GST on qualifying export transactions.

This means exporters can supply services:

• Without paying GST by filing a LUT, or
• By paying IGST first and later claiming a refund.

Although exports qualify as zero-rated supplies, exporters must still comply with GST rules. They must:

• Issue GST-compliant export invoices
• File GST returns on time
• Maintain export invoices and foreign remittance records
• Complete LUT filings wherever applicable.

Note: Zero-rated supplies are different from exempt supplies. In a zero-rated supply, businesses do not charge GST but can still claim ITC and refunds. Meanwhile, in an exempt supply, businesses cannot charge GST and also lose the right to claim ITC.

LUT for Export of Services Under GST

A LUT for export of services under GST allows businesses to export without paying GST upfront. Instead of paying IGST and claiming a refund later, exporters file a LUT for export of services under GST and supply without charging tax.

Most exporters prefer the LUT route because it:

• Improves cash flow
• Reduces refund delays
• Avoids unnecessary tax blockage.

Registered exporters can file LUT online on the GST portal using Form GST RFD-11. Once approved, the LUT remains valid for the entire financial year and requires yearly renewal.

To use the LUT facility, exporters must:

• File GST returns on time
• Maintain export invoices and foreign remittance records
• Receive payment within the time limit prescribed under FEMA regulations. If they fail to do so, the export may lose its zero-rated status under GST, which can lead to tax liability, interest, and denial of refund benefits.

Note: If an exporter does not file an LUT, the exporter must first pay IGST on export invoices and later apply for a refund.

GST Refund for Export of Services

GST law allows exporters to claim refunds on taxes related to exported services in two ways:

• Refund of unutilized ITC when they export services under an LUT without paying GST.
• Refund of IGST paid on export invoices when they export services after paying tax.

The table below explains how both refund routes work:

Particulars	Export Under LUT Without Paying GST	Export With IGST Payment and Refund
GST on export invoice	No GST charged	IGST charged on export invoice
Upfront tax payment	Not required	Required before claiming a refund
Refund claimed	Refund of unutilized ITC	Refund of IGST paid on exports
Working capital impact	Lower	Higher due to upfront tax payment
Commonly used by	Most service exporters	Businesses that do not file LUT
Compliance requirement	Valid LUT filing required	IGST payment is required before the refund claim

Documents Needed for GST Registration and Export Compliance

The commonly required documents for GST registration, LUT filings, export compliance, and refund claims include:

• PAN card and Aadhaar card of the applicant, partners, or directors
• Passport-size photograph
• Business registration proof, such as a Certificate of Incorporation (CoI) or partnership deed
• Address proof of the principal place of business
• Bank account details, such as a canceled cheque or bank statement
• LUT acknowledgment in Form GST RFD-11
• Export invoices marked as “Supply under LUT without payment of IGST.”
• FIRC or BRC as proof of foreign exchange realization
• Bank statements showing receipt of foreign payments
• GST returns and refund filing records

How to File GST Return for Export of Services?

Businesses must correctly report export transactions in GST returns to avoid refund delays and compliance issues.

Here is how to file a GST return for the export of services:

1. Report export invoices in GSTR-1: Enter export invoices in Table 6A of GSTR-1 and report exports under zero-rated supplies.
2. Enter correct invoice details: Mention the correct SAC code, invoice value, export type, and client details.
3. Report exports in GSTR-3B: Disclose zero-rated turnover, ITC, and IGST paid on exports wherever applicable.
4. Reconcile records before filing: Match figures in GSTR-1 and GSTR-3B, export invoices, bank records, and FIRC/BRC documents.
5. File refund application in Form GST RFD-01: Submit the refund claim separately after filing GST returns.
6. Maintain export records: Keep LUT filings, invoices, agreements, and foreign payment proofs for verification.

What is the Time Limit to Claim a GST Refund on Export of Services?

Under Section 54(1) of the CGST Act, businesses must file GST refund claims in Form RFD-01 within two years from the relevant date. For export of services, the relevant date depends on the transaction flow:

• If payment arrives after you supply the service, the date of foreign currency receipt becomes the relevant date.
• If you receive payment in advance, the invoice date becomes the starting point.

In most cases, the two-year period begins from the date of foreign currency receipt, not the invoice date.

Note: RBI generally requires receipt of foreign payment within the prescribed time limit (currently extended up to 15 months). Exporters must regularly track FEMA rules on the realization of export proceeds to avoid compliance issues and protect the export’s eligibility for GST benefits.

SAC Code for Export of Services Under GST

Service exporters must mention the correct Services Accounting Code (SAC code) in GST invoices and returns. GST uses SAC codes for services, while HSN codes mainly apply to goods.

The SAC code helps the GST department identify the nature of the exported service. Businesses must use the correct code while:

• Issuing export invoices
• Filing GSTR-1 and GSTR-3B
• Claiming GST refunds

Some commonly used SAC codes for exported services include:

Service Type	SAC Code
Software development services	998313
IT consulting services	998312
Digital marketing services	998365
Management consultancy services	998311
Business support services	998599

Note: Always select the SAC code based on the actual nature of the service. Incorrect classification can delay refunds and create issues during GST assessments.

Exchange Rate for Export of Services Under GST

For GST purposes, service exporters must convert foreign currency invoice values into Indian Rupees (INR). They must use the RBI reference rate or the exchange rate adopted by the authorized dealer bank, wherever applicable.

The exchange rate becomes important when:

• Issuing export invoices
• Filing GST returns
• Calculating GST refunds
• Reporting export turnover

Tip: Use the same exchange rate consistently across invoices, GST returns, and bank records to avoid mismatches during refund processing.

Common Mistakes While Filing GST Returns for Export of Services and How to Avoid Them

Many service exporters face delayed refunds, rejected claims, or departmental queries due to small but critical mistakes. Avoid the following issues to ensure smooth filing and faster refunds:

• Treating exports as exempt instead of zero-rated: Exempt supplies do not allow ITC claims, while zero-rated exports do. Always classify export services as zero-rated supplies under Section 16 of the IGST Act.
• Not renewing the LUT on time: An expired LUT can make exports liable to IGST and interest. File or renew the LUT at the beginning of every financial year before raising export invoices.
• Mismatch between GSTR-1 and GSTR-3B: Differences in export turnover reported in returns can delay refunds. Ensure figures in Table 6A of GSTR-1 match the zero-rated turnover reported in GSTR-3B.
• Missing FIRC or BRC documents: GST authorities require proof of foreign exchange realization for export claims. Maintain FIRC or BRC records for every export payment.
• Receiving payment through non-compliant channels: Export payments must comply with RBI rules. Accept payment in convertible foreign exchange or in INR only where RBI permits it.

Let RegisterKaro simplify export GST compliance for your business. From GST registration and LUT filing to refund claims and return filing, our experts help service exporters manage end-to-end GST compliance accurately and on time. Contact us today for professional assistance with export GST registration, LUT filings, and refund processing!

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