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GST on export of services for Indian freelancers, the complete guide
Indian freelancers earning from foreign clients often ask a simple question, is GST applicable on foreign client payments. The short answer is no for most remote services, provided your work qualifies as an export of services, and your paperwork is in order. This guide explains the rules that matter, place of supply, zero rating mechanics, and the documentation that proves compliance.
What qualifies as export of services for Indian freelancers
Not every payment from abroad automatically escapes GST. A service becomes an export only when all five conditions are met at once, supplier in India, recipient outside India, place of supply outside India per Section 13 of the IGST Act, payment received in convertible foreign exchange or in INR where RBI permits, supplier and recipient are not merely establishments of the same legal entity. For a deeper explainer, see the TaxGuru guide on GST for freelancers and consultants.
These conditions typically fit remote services, software development, graphic design, content writing, digital marketing, consulting, and online training. When all five conditions align, the supply is zero rated. You do not charge GST, yet you retain the right to claim refunds of input tax credits on eligible business purchases. For context on freelancer taxation, review this Outlook Money explainer on how freelancers in India are taxed on foreign client income.
Place of supply outside India, the rule that decides everything
The place of supply determines whether GST applies or whether you can treat a transaction as an export. Under Section 13, the general rule says the place of supply is the location of the recipient, if the recipient’s location is unknown, the place of supply defaults to the location of the supplier. A practical summary is available in the TaxGuru guide on GST for freelancers and consultants.
Examples:
Two legal routes for zero rated exports
Indian law offers two pathways to zero rating, export without payment of IGST by filing an LUT, or pay IGST and claim a refund later. For the LUT process, read LUT for zero rated services, and for broader treatment see the TaxGuru guide. Many practitioners also track clarifications in the 2025 update on GST for freelancers.
LUT route: You do not charge IGST on export invoices, you can still claim refunds of input tax credits. Advantage, cash flow remains free, and invoices are simpler. Requirement, GST registration and annual LUT renewal.
Paid IGST route: You charge and collect IGST, then file for refund after realization. Advantage, no LUT needed. Disadvantages, cash blockage and possible client confusion.
How to export without payment of IGST using the LUT
The Letter of Undertaking is a declaration that you will comply with export conditions. Most registered taxpayers can file an LUT, bonds are rare. File Form RFD 11 on the GST portal. The LUT is valid for the financial year, renew it every April. For a step by step overview, see the TaxGuru guide.
After approval, issue export invoices without IGST. Clearly state zero rated supply, mention the LUT reference number if you wish, include the correct SAC, the billing currency, and the INR equivalent using the exchange rate on the invoice date.
Report exports in GSTR 1, Table 6A, and in GSTR 3B under the appropriate field. If input tax credits accumulate, file Form RFD 01 with your export invoices, payment proofs like e-FIRA or FIRC, bank advice, and the LUT acknowledgment. For processing nuances and timelines, refer to the 2025 update on GST for freelancers.
Essential documentation for GST export compliance
Compliance stands on documentation. Maintain the following without fail.
Platforms like Karbon Business auto generate e-FIRA within twenty four hours of each payment, which removes a major administrative headache.
Is GST applicable on foreign client payments, a decision tree
Path 1: All five export conditions are met, and place of supply is outside India. Result, zero rated, no GST on invoice. See the Outlook Money explainer for related tax points.
Path 2: You are an intermediary, or the service is performed in India. Result, GST applies, typically at eighteen percent IGST. Background in the TaxGuru guide.
Path 3: Payment not received in convertible foreign exchange within one year, and no RBI extension. Result, export status at risk, refunds may need reversal.
Edge cases: Services performed in India for a foreign client are not exports, INR receipts not permitted under RBI rules do not qualify, billing your own overseas branch fails the different persons test.
GST registration thresholds for freelancers exporting services
The general threshold is ₹20 lakh, special category states have ₹10 lakh. See the N C Agrawal guide on GST for export of software services for a refresher.
In practice, GST registration is necessary if you want to file an LUT and claim refunds of input tax credits. Many freelancers register voluntarily to access zero rating and to increase enterprise client confidence.
Receiving foreign payments and staying compliant
Getting paid correctly is as important as delivering good work. ACH, SEPA, Faster Payments, SWIFT, and card rails all work, as long as you obtain bank advice and e-FIRA or FIRC for each receipt.
Cross border platforms can simplify compliance. Karbon Business provides local USD, GBP, EUR, and CAD accounts for clients to pay like a domestic transfer, settles INR within twenty four to forty eight hours, charges a flat one percent platform fee with zero FX markup, and auto generates e-FIRA for every payment. Alternatives include Wise Business, Payoneer, PayPal, RazorpayX International, and Revolut Business, subject to India availability.
Real world freelancer scenarios
Scenario 1, software developer for US SaaS client: Remote delivery, recipient abroad, place of supply outside India, LUT filed, invoice marked zero rated, e-FIRA captured, reported in GSTR 1 and 3B, refunds claimed via RFD 01.
Scenario 2, designer acting as intermediary: Work routed via marketplace, intermediary rule applies, place of supply in India, GST charged and paid, not an export.
Scenario 3, trainer delivering on site workshop: Performance in Delhi for a UK company, place of supply in India, GST applies.
Scenario 4, content writer paid in USD: Remote writing, recipient abroad, platform settles INR and issues e-FIRA, LUT in place, zero rated export.
Freelancer checklist for export compliance
Before invoicing
After payment
For refunds
Streamline payments and compliance with the right tools
Working with systems that generate airtight records makes GST easy. Karbon Business reduces manual work by providing local collection accounts, fast INR settlement, and automatic e-FIRA for every inward foreign payment.
Final compliance note
GST rules evolve, and RBI guidelines matter for exporters of services. This guide covers common scenarios, but it is not professional advice. Discuss your contracts, invoices, and filings with a qualified CA. To stay current on cross border rules, see FEMA rules for freelancers in India.
Master the interplay of place of supply, zero rating, and documentation, and you will invoice correctly, avoid surprise tax bills, and claim every rupee of input tax credit you deserve.
FAQ
Is GST applicable on foreign client payments for freelancers in India, yes or no
It depends on place of supply and export conditions. If the recipient is outside India, the place of supply is outside India, payment is received in convertible foreign exchange or permitted INR, and you and the client are not the same legal entity, then it is a zero rated export, no GST on the invoice. If you are an intermediary or the service is performed in India, GST applies.
How to invoice a US client without charging GST, what exact line items should I add
File an LUT first. Then issue the invoice with service description, SAC, foreign currency amount and INR equivalent, and a clear note, zero rated supply under LUT, no IGST payable. Add your LUT reference optionally. Report the invoice in GSTR 1 Table 6A and disclose in GSTR 3B.
Do I need GST registration if my turnover is under ₹20 lakh but I only export services
Threshold exemption exists in law, however you cannot file an LUT or claim input tax credit refunds without registration. Most exporters of services opt for voluntary registration to access zero rating and to satisfy enterprise client onboarding requirements.
Place of supply confusion, I am working remote from India for a UK company, which rule applies
For most remote services, Section 13 says place of supply is the location of the recipient, which is the UK. If you are not an intermediary and you did not perform the service in India in a way that triggers a specific exception, it is an export and zero rated. When in doubt, document how the service was delivered and keep evidence of remote delivery.
My foreign client wants me to travel and deliver a workshop in Mumbai, should I charge GST
Yes. The service is physically performed in India, so place of supply is India. Charge IGST at the applicable rate, usually eighteen percent for professional services, even though the client is foreign. Explain the rule to the client upfront to avoid confusion.
What is LUT and how fast can I get it to start zero rated invoicing
LUT is a Letter of Undertaking you file on the GST portal through Form RFD 11. Most registered taxpayers qualify. Once approved, it is valid for the financial year. File early in April to keep continuity. For process clarity, consult LUT for zero rated services.
What proof of inward remittance do I need for refunds, is e-FIRA enough
Yes, digital e-FIRA issued by your bank or payment platform is accepted and is functionally the modern replacement for paper FIRC in many cases. Attach e-FIRA, invoice, contract, and proof of delivery with your RFD 01 refund application.
Clients pay me through marketplaces, am I considered an intermediary under GST
If you are facilitating supply between two parties and not supplying on your own account, you likely fall under the intermediary definition, which fixes place of supply in India even if the client is overseas. In that case, charge GST. Review your contract structure and scope carefully to determine if you are truly an intermediary.
How can Karbon Business help me with GST compliance on international payments
Karbon Business gives you local USD, GBP, EUR, and CAD account details so clients can pay domestically, settles funds in INR within one to two days, and auto generates e-FIRA for every receipt. That single feature removes the biggest blocker for refunds and audits, missing remittance proofs.
What happens if the foreign payment is delayed beyond one year from invoice date
Without an RBI approved extension, export status may be denied, and any input tax credit refunds you claimed could be reversed with interest. Follow up proactively, keep email trails, and if needed, consult your bank and CA to apply for an extension and document the delay.
Can I charge IGST to the foreign client and then claim a refund later, is that practical
Yes, you can follow the pay first route. You will charge IGST, collect it, and then file for a refund after realization. It works but ties up cash and can confuse clients. Most freelancers choose the LUT route for smoother cash flow and simpler client experience.
What SAC should I use for software, design, or consulting exports, and does it affect zero rating
Use the most accurate SAC for your service, for example software development, design, or management consulting codes. The SAC itself does not grant zero rating, but correct classification improves audit clarity and refund processing, and mismatches often trigger queries.
Is receiving in INR allowed for exports, will GST officers accept that
INR receipts are acceptable only where permitted by RBI, for example for certain invoicing arrangements. Keep the bank documents that show the permitted route. If INR receipt is not RBI permitted for your case, it may not qualify as an export for GST purposes.
