When a service counts as an export
Section 2(6) of the Integrated Goods and Services Tax Act, 2017 says a supply of services is an export of services when all five of these are true:
- you, the supplier, are located in India
- your client, the recipient, is located outside India
- the place of supply is outside India
- you are paid in convertible foreign exchange, or in Indian rupees where the Reserve Bank of India permits it
- you and your client are not merely establishments of the same person, as Explanation 1 to section 8 describes: for example, a branch of your own business abroad
If any one of them fails, the supply is not an export, even if the client is abroad.
Where the service is supplied
For most services, section 13(2) puts the place of supply at the location of the recipient. When that location is not available in the ordinary course of business, it is the location of the supplier instead. Sub-sections (3) to (13) set different rules for some kinds of services, so check them if your work is tied to goods, property, events or transport, for example.
Under section 7(5), a supply where the supplier is in India and the place of supply is outside India is treated as an inter-State supply. That matters for registration, below.
Intermediaries
Section 2(13) defines an intermediary as a broker, an agent or anyone else who arranges or facilitates a supply between two or more people, but not someone who supplies on their own account. Before the Finance Act, 2026, section 13(8)(b) put the place of supply of intermediary services at the supplier's location, so an Indian intermediary working for a client abroad could not export.
Section 157 of the Finance Act, 2026, dated 30 March 2026, omitted section 13(8)(b). With that provision gone, intermediary services follow the default rule in section 13(2), so they can count as an export when all five conditions above are met. If an invoice, payment or piece of work falls either side of that change, ask a chartered accountant how it is treated.
Zero rated: no GST, and you keep your input credit
Section 16(1) makes an export of services a zero rated supply. Under section 16(2), and subject to the blocked credit rules in section 17(5) of the CGST Act, you can still take credit for the GST on your business purchases, even though the export itself carries no tax.
There are two ways to export:
- Under a bond or Letter of Undertaking (LUT), without paying IGST. You can then claim a refund of the input tax credit you could not use (section 16(3)), under section 54 of the CGST Act.
- Paying IGST and claiming it back. Section 16(4) allows this only for the classes of persons, or of goods or services, that the Government notifies.
The Letter of Undertaking
Rule 96A of the CGST Rules, 2017 says that a registered person who wants to export services without paying IGST must, before exporting, furnish a bond or a Letter of Undertaking in FORM GST RFD-11 to the jurisdictional Commissioner.
In it you undertake to pay the tax, with interest under section 50(1), if you are not paid for the service in convertible foreign exchange, or in rupees where the Reserve Bank of India permits it. The tax is due within 15 days after the later of one year from the invoice date and the period the Foreign Exchange Management Act, 1999 allows (with any extension the Reserve Bank of India permits), or any further period the Commissioner allows.
If you don't pay that amount in time, exporting under the bond or LUT is withdrawn until you pay it (rule 96A(3) and (4)). The Central Board of Indirect Taxes and Customs sets the conditions for using a Letter of Undertaking by notification (rule 96A(5)).
What the invoice must show
Rule 46 of the CGST Rules requires a registered person's export invoice to carry one of two endorsements, as the case may be:
- under a bond or LUT: SUPPLY MEANT FOR EXPORT/SUPPLY TO SEZ UNIT OR SEZ DEVELOPER FOR AUTHORISED OPERATIONS UNDER BOND OR LETTER OF UNDERTAKING WITHOUT PAYMENT OF INTEGRATED TAX
- paying IGST: SUPPLY MEANT FOR EXPORT/SUPPLY TO SEZ UNIT OR SEZ DEVELOPER FOR AUTHORISED OPERATIONS ON PAYMENT OF INTEGRATED TAX
The invoice also shows the recipient's name and address, the address of delivery and the name of the country of destination. The India GST invoice format guide lists everything else a tax invoice needs, and the invoice generator's India GST tax invoice mode has an export option that adds the endorsement and the country.
Do you need to register?
Because exports are inter-State supplies, section 24(i) of the CGST Act, which requires anyone making an inter-State taxable supply to register, would normally apply. Notification 10/2017-Integrated Tax exempts people making inter-State supplies of taxable services from registering if their aggregate turnover, computed on an all-India basis, is no more than ₹20,00,000 in a financial year. A lower limit applies in some special category States, so check the limit for yours. The exemption covers inter-State supplies of services only, not goods.
The LUT and the refund of input tax credit are only for registered persons, and registering also brings returns and other duties. A chartered accountant can work out your aggregate turnover and whether registering suits you.
Checklist
- Your client is located outside India and the place of supply is outside India.
- You are paid in convertible foreign exchange, or in rupees where the Reserve Bank of India permits it, within the time rule 96A allows.
- The client is not your own establishment abroad.
- If you are registered, your LUT is in place before you invoice without IGST.
- If you are registered, the invoice carries the export endorsement and the country of destination.
- If you work as an intermediary, you have checked how the 2026 change applies to your contracts.
Parliament can amend the Acts, and the Government can change the rules and notifications on the GST Council's recommendation. This page shows the law as read on the CBIC portal on 15 October 2026.
Sources
- CBIC Tax Information Portal: Integrated Goods and Services Tax Act, 2017, sections 2(6), 2(13), 7(5), 13 and 16 (read 15 October 2026; section 13(8)(b) omitted by section 157 of the Finance Act, 2026)
- CBIC Tax Information Portal: Central Goods and Services Tax Act, 2017, section 24 (read 15 October 2026)
- CBIC Tax Information Portal: CGST Rules, 2017, rules 46 and 96A (read 15 October 2026)
- CBIC Tax Information Portal: Notification 10/2017-Integrated Tax (13 October 2017, as amended; issued text read 15 October 2026)