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Export of Services Under GST

Exporting services from India can be highly rewarding, but it also comes with specific GST export rules, zero-rated supply benefits, and valuable input tax credit (ITC) refunds. In this guide, we break down everything in a simple and conversational style that’s easy to follow.

1. What Is Export of Services Under GST?

Under GST law, export of services means supplying services from an Indian supplier to a recipient located outside India. The supply must also originate in India, be received outside, and the payment must be in foreign currency (or in INR if RBI allows).

Because of this, exports are classified as zero-rated supplies under Section 16 of the IGST Act, meaning no GST is charged, and exporters can reclaim any GST they paid on related inputs.

2. Why Is Zero-Rated Supply Important?

Calling exports "zero-rated" ensures that GST does not increase your export costs.

Exporters can:

• Export with LUT/Bond, avoiding IGST, and then claim refund of unutilized ITC
• Pay IGST upfront on the export invoice and later claim a refund of that IGST.

Both paths help maintain competitiveness in foreign markets.

3. Two Routes for Exporting Services

A. Export Under LUT or Bond (Without Paying IGST)

Suppliers file a Letter of Undertaking (LUT) using Form GST RFD‑11 annually

They can export without paying IGST and later claim refund of ITC.

B. Export with IGST and Refund

• Exporter pays IGST on the invoice
• THEN files refund claim via Form RFD‑01, backed by GSTR-1, GSTR-3B, and other documents.

4. How to Claim Refund of GST/ITC?

• File GSTR‑1 and GSTR‑3B, reporting exports as zero-rated or paid IGST.
• Submit Form RFD‑01 (for service exports) on GST portal.
• Attach documents: LUT/Bond, export invoices, and FIRC/BRC (foreign remittance proof).
• The refund is processed after verification and credited to your bank account.

5. Compliance Checklist for Export of Services

• GST registration (mandatory even if below ₹20L turnover).
• File LUT before exporting if choosing that route.
• Maintain proper documentation: LUT, invoices stating export, FIRC/BRC, bank receipts, service proofs.
• File timely monthly GSTR-1 and GSTR-3B returns.

6. Benefits and Common Challenges

Key Benefits:

• Zero GST cost on export (via LUT) keeps services competitive.
• Easier access to ITC refunds, improving cash flow.

Common Challenges:

• Delays in ITC/IGST refund processing.
• Clarity needed on place of supply and recipient location.
• Missing forms like LUT, FIRC, or RFD‑01 can delay refunds.

FAQs on Export of Services Under GST

Is GST registration mandatory for service exporters?

Yes. Exports are considered interstate supplies under Section 24, so GST registration is needed even if turnover is below ₹20 lakh.

What is an LUT?

A Letter of Undertaking (Form RFD‑11) lets you export without paying IGST, preventing upfront cash outflows.

Can I export services without paying GST?

Yes, if you file LUT and meet export conditions (foreign recipient, convertible currency, place outside India).

How do I get a refund of GST paid on export?

Pay IGST, file GSTR‑1/3B, submit RFD‑01 with supporting documents, and receive refund after verification.

Can I claim ITC refund without paying IGST?

Yes, using the LUT route, you can claim refund of utilized ITC without paying IGST.

What’s the time frame to claim refunds?

Refund claims should generally be filed within 2 years from the relevant date (usually export date) under Section 54 of CGST Act.

Final Takeaway

Exporting services under GST offers excellent benefits - especially using the zero-rated export and ITC refund mechanisms. But success depends on timely LUT filing, meticulous documentation, and prompt GST return filing. Follow these steps, keep your paperwork in order, and you can boost cash flow while staying compliant in FY 2024–25 and 2025–26.