LUT and export of services, start to finish

A foreign client pays you in dollars. The law calls that an export of services and charges 0% GST — but only if you do four things in the right order. Here is the whole process, from first invoice to refund in the bank.

Step 0 · Is it an export at all?

Section 2(6) of the IGST Act sets five conditions: you are in India; the recipient is outside India; the place of supply is outside India; you are paid in convertible foreign exchange (or INR through a Special Rupee Vostro account); and the recipient isn't simply your own overseas office. For most remote freelance work — code, design, writing, consulting delivered online — all five hold, because the place-of-supply default (s.13(2)) is the client's location. Tick them off in the checker.

One category changed this year: intermediaries (agents, brokers, commission facilitators). Until 30 March 2026 their place of supply was deemed India, so no export. The Finance Act 2026 omitted that rule (s.13(8)(b)), and from that date they qualify like everyone else — for invoices dated on or after 30 March 2026.

Step 1 · Register, if you haven't

Below ₹20 lakh turnover, export/inter-state services don't force registration (Notification 10/2017-IT). But the LUT — and every refund — needs a GSTIN. Most exporting freelancers therefore register voluntarily; since November 2025, Rule 14A grants it in about three working days after Aadhaar authentication. Check whether you must.

Step 2 · File the LUT (Form RFD-11)

Where: GST portal → Services → User Services → Furnish Letter of Undertaking.
What: three self-declarations (you'll export within the rules, realise payment within a year, pay IGST with interest if you don't), two witnesses' details, sign with DSC (companies/LLPs) or EVC (individuals). No fee.
When: before your first export invoice of the financial year — ideally in April. An LUT covers one FY (1 April–31 March); file afresh every year.
Acceptance: the ARN generated on submission is your acceptance (Circular 40/14/2018). Keep it — it goes on every export invoice.
Who can't: anyone prosecuted for tax evasion above ₹2.5 crore must furnish a bond with bank guarantee instead. Everyone else qualifies.

Step 3 · Invoice correctly

An export invoice under LUT carries no IGST, states the place of supply (the client's country), your GSTIN, the LUT ARN, and the Rule 46 endorsement: "Supply meant for export of services under Letter of Undertaking without payment of integrated tax." Bill in the client's currency. Our generator does all of this — nothing uploaded.

Step 4 · Get paid, keep the proof, watch the clock

FIRC / e-FIRC: your bank's certificate that foreign currency arrived. Collect it per remittance or periodically — it is the export's proof for GST and for income tax.
The one-year rule (Rule 96A): payment must arrive within one year of the invoice. If not, IGST plus 18% interest is payable within 15 days, and the LUT facility is suspended until you pay. Chase slow clients before month 11.
Returns: report exports in GSTR-1 (Table 6A) and GSTR-3B (zero-rated row) every period, even at zero tax.

Step 5 · Claim what's yours

With zero output tax, the GST you paid on inputs — laptop, software, co-working, phone — sits unused. Claim it as a refund of unutilised ITC under Rule 89 (Form RFD-01, within two years, formula: net ITC × export turnover ÷ total turnover). Since 1 October 2025, low-risk applications get 90% provisionally within days; the balance follows verification. The ₹1,000 minimum still applies to service exporters.

What if you skipped the LUT?

Two lawful paths remain: charge IGST on the invoice, pay it, and claim it back under Rule 89 (cash stuck for months); or file the LUT now and use it from the next invoice. The one unlawful path is charging nothing without an LUT — that invites a demand with 18% interest.

Worked example, end to end

Meera, a UX consultant in Jaipur, signs a US client in May. She registers under Rule 14A (three days), files an LUT the same week, and invoices ₹4 lakh a month in USD with the endorsement. Her bank issues e-FIRCs monthly. In GSTR-3B she reports zero-rated supplies; in March she files RFD-01 for the ₹38,000 of GST she paid on a laptop and software, and 90% lands in her account within a fortnight. Total GST cost of ₹48 lakh of exports: zero — plus a refund. Under income tax she is on the 50% presumptive track (technical consultancy) — a separate calculation.

Tools for each step

Export of services checker — Step 0.
GST registration checker — Step 1.
Export invoice generator — Step 3.
AdSense/creator income — the same process for platform-paid creators.

Last verified: 15 September 2026 — CT, 10/2017-IT, 13/2025-CT; Circulars 40/14/2018 and 202/14/2023 · Reviewed with a practising CA's responses (2 September 2026) · Not tax advice.