Last Updated on August 12, 2026
Indian businesses increasingly provide services to clients in the USA, UK, UAE, Canada, Australia, Singapore and other countries. From software development and digital marketing to consulting, accounting and professional services, earning from foreign clients has become common.
But an important question is: Do you have to charge GST when providing services to a foreign client?
Generally, services provided from India to a foreign client can qualify as an export of services and may be treated as zero-rated under GST, provided all prescribed conditions are satisfied. Simply receiving payment from a foreign customer, however, does not automatically make a transaction an export.
This blog explains GST on foreign clients, export of services, place of supply, LUT, invoices, payment requirements and GST refunds in simple terms.
Quick Summary
GST on services provided to foreign clients depends on whether the transaction qualifies as an export of services under the IGST Act, 2017. When the prescribed conditions are satisfied, the service is treated as a zero-rated supply, allowing an eligible exporter to supply under a valid Letter of Undertaking (LUT) without payment of IGST or pay IGST and claim a refund, subject to the applicable rules. GST registration, invoicing, input tax credit, refund, and foreign-exchange requirements should be reviewed based on the nature of the service and the specific transaction.
- Export of services: Services supplied to a foreign client can qualify as an export when all prescribed conditions under the IGST Act are satisfied.
- Zero-rated supply: Qualifying exports of services are treated as zero-rated supplies under the GST law.
- GST on foreign clients: An eligible exporter can generally supply services under LUT without payment of IGST, subject to the applicable conditions.
- GST registration: Registration requirements depend on the applicable GST provisions, the nature of the supplies, turnover, and other circumstances. Exporters should not assume that the normal turnover threshold alone determines registration.
- LUT: A Letter of Undertaking allows eligible registered exporters to supply qualifying services without payment of IGST, subject to the prescribed conditions.
- Input Tax Credit: Eligible ITC can generally be claimed in relation to zero-rated supplies, subject to the GST rules and applicable documentation.
- Refund of ITC: An eligible exporter may claim a refund of unutilised ITC for qualifying zero-rated supplies, subject to the prescribed conditions and restrictions.
- Payment from foreign clients: Payment does not necessarily have to be received only in foreign currency. Receipt in Indian rupees may qualify where permitted under applicable RBI regulations, and the GST export conditions are satisfied.
Providing Services to Foreign Clients?
Kanakkupillai can assist with GST registration, LUT filing, export invoicing, ITC reconciliation, GST returns, and refund claims for businesses providing services to overseas clients.
What is GST on Foreign Clients?
GST on foreign clients refers to the tax treatment of services supplied by an Indian business to a customer located outside India. For example, an Indian digital marketing agency provides SEO services to a company in Dubai. If the transaction satisfies the conditions for export of services, it can qualify as a zero-rated export of services.
The foreign location of the customer alone is not sufficient. The transaction must satisfy the conditions prescribed under the Integrated Goods and Services Tax Act, 2017 (IGST Act). Therefore, businesses should examine the nature of the service, recipient location, place of supply and payment conditions before deciding how GST should be handled.
Note: Online Information Database Access and Retrieval (OIDAR) services and certain automated digital services follow separate place-of-supply and registration rules and may not qualify for the same export treatment.
When is a Service to a Foreign Client Considered an Export?
Section 2(6) of the IGST Act defines an export of services. Broadly, the following conditions must be satisfied: –
- The supplier of the service is located in India.
- The recipient is located outside India.
- The place of supply is outside India.
- Payment is received in convertible foreign exchange or in Indian rupees where permitted under applicable RBI provisions.
- The supplier and recipient are not merely establishments of the same person in the circumstances covered by the IGST Act.
Therefore, receiving money from an overseas customer does not automatically make the service an export.
All relevant conditions need to be considered together.
Example of Export of Services
Suppose an Indian software development company develops software for a company based in the USA. If the Indian company is the supplier, the customer is located in the USA, the applicable place-of-supply rules result in the place of supply being outside India, the payment condition is satisfied, and the parties do not fall within the restricted establishment relationship, the transaction can qualify as an export of services.
Such a qualifying export is treated as a zero-rated supply under GST.
What Is the GST Rate on Export of Services?
Qualifying exports of services are zero-rated under GST.
Zero-rated does not simply mean exempt. Zero-rated supplies can carry the benefit of input tax credit, subject to the applicable provisions. Section 16 of the IGST Act provides for zero-rating of exports of goods or services. This is important for businesses that incur GST on eligible inputs and input services while providing services to overseas customers.
For example, an exporter may incur GST on eligible professional services, software subscriptions or other business expenses. Subject to the normal ITC conditions, such credit may be available and, where permitted, may support a refund claim.
GST Rate for Services to Foreign Clients
| Scenario | Applicable Rate |
| Qualifying export, supplied under LUT | 0% (zero-rated, no IGST charged) |
| Qualifying export, IGST paid upfront then refunded | Standard rate (currently 18% for most professional, IT, marketing, and consulting services), refundable |
| Doesn’t qualify as export (e.g., fails a Section 2(6) condition, or was an intermediary service before 30 March 2026) | Standard domestic rate applies: 18% for most professional/digital services under GST 2.0 |
Following the GST Council’s rate rationalisation effective 22 September 2025, most professional, IT, and consultancy-type services fall under the 18% standard slab; this is the rate that applies by default if the export conditions aren’t met.
Note: GST rates on services were restructured effective 22 September 2025 under GST 2.0; most professional and digital services now fall under the 18% slab (down from a more fragmented 4-tier structure). This affects the rate that applies to any non-qualifying “export” transaction.
Should You Charge GST to a Foreign Client?
If the service qualifies as an export and is supplied under LUT without payment of IGST, the exporter generally does not charge IGST to the foreign client. An eligible registered taxpayer can furnish a Letter of Undertaking (LUT) and make qualifying export supplies without payment of IGST. For an export made without payment of IGST under LUT, the invoice should carry the prescribed export endorsement:
“SUPPLY MEANT FOR EXPORT UNDER BOND OR LETTER OF UNDERTAKING WITHOUT PAYMENT OF IGST.”
Businesses should ensure that the invoice and supporting records accurately reflect the nature of the transaction.
Serving overseas customers? Proper GST documentation can make export compliance much easier.
Note: Exporters who aren’t eligible for LUT (e.g., those prosecuted for tax evasion above ₹2.5 crore) can still export by paying IGST upfront on the invoice and claiming a refund of that tax afterwards a slower but available alternative route.
What Is LUT in GST?
LUT stands for Letter of Undertaking.
It enables an eligible registered taxpayer to supply qualifying goods or services for export without payment of IGST, subject to the prescribed conditions. Instead of paying IGST on the export invoice and then seeking a refund of that tax, an exporter using LUT can make the supply without payment of IGST and, where eligible, claim a refund of unutilised ITC.
For businesses regularly providing services to overseas customers, LUT can therefore be an important part of GST compliance.
How to Provide Services to Foreign Clients Under GST?
Step 1: Check GST Registration Requirements
First, determine whether GST registration is required based on the applicable GST provisions and the nature and value of your supplies.
Having foreign customers does not automatically mean that GST registration requirements do not apply. While inter-state supply normally triggers compulsory registration under Section 24, a specific exemption (Notification No. 10/2017-Integrated Tax) allows service exporters to remain unregistered if their aggregate turnover stays within the standard threshold; this exemption doesn’t extend to OIDAR services or e-commerce-operator-facilitated supplies.
Step 2: Check Whether the Service Qualifies as Export
Review the conditions under Section 2(6) of the IGST Act, including: –
- Supplier location
- Recipient location
- Place of supply
- Payment requirements
- Establishment relationship
Step 3: Furnish LUT
If you intend to provide the eligible export services without payment of the IGST, furnish the applicable LUT through the GST system.
Step 4: Issue the Export Invoice
Issue an invoice containing the required particulars and the appropriate export endorsement. The invoice should clearly state that the supply is made for export without payment of IGST when LUT is being used.
Step 5: Receive Payment Through Permitted Channels
Maintain evidence of receipt of export proceeds. Payment requirements are an important part of establishing export status. Indian-rupee receipts can also qualify where permitted under applicable RBI provisions.
Step 6: Report the Export in GST Returns
Export supplies must be reported correctly in the applicable GST returns. Accurate and proper reporting helps reconcile invoices, books, payment records and refund claims.
Step 7: Claim Refund of Eligible ITC
Where eligible, an exporter supplying services under LUT can apply for a refund of unutilised ITC according to the applicable GST refund provisions.
Place of Supply: Why Does It Matter?
The place of supply is one of the most important factors in determining whether a service provided to a foreign customer qualifies as an export.
For cross-border services, Section 13 of the IGST Act generally provides that the place of supply is the location of the recipient, except where specific provisions apply.
However, special rules can apply to certain services, including services: –
- relating to goods physically made available;
- requiring the physical presence of the recipient;
- directly related to immovable property;
- relating to events; or
- covered by other specific provisions of Section 13.
Therefore, an Indian business should not assume that every service supplied to an overseas customer automatically qualifies as an export.
The exact nature of the service must be examined against the applicable place-of-supply rule.
Are Intermediary/Agency Services Treated the Same Way?
Not always. If your role is to arrange or facilitate a deal between two other parties (rather than supply the service yourself), common for referral, agency, or facilitation arrangements, you may fall under the definition of an “intermediary.” Until 30 March 2026, intermediary services were denied export status because the place of supply was deemed to be India. Following the Finance Act 2026, this rule was removed, and intermediary services now generally follow the recipient-location rule like other services, potentially unlocking export/zero-rating benefits that were previously unavailable. If your business acts as an agent, broker, or facilitator for a foreign client rather than the direct service provider, this distinction is worth checking carefully.
Is Payment in Foreign Currency Mandatory?
No, not in every situation.
Section 2(6) of the IGST Act refers to receipt of payment in convertible foreign exchange or in Indian rupees where permitted by the Reserve Bank of India. Therefore, it is incorrect to assume that payment must always be received in USD, EUR, GBP or another foreign currency. Businesses should check whether their specific payment arrangement complies with the applicable GST and RBI requirements.
It is also advisable to maintain supporting records such as:
- Bank statements
- Foreign Inward Remittance Certificate (FIRC) or Bank Realisation Certificate (BRC) from your bank
- Relevant bank documents
- Export invoices
- Service agreements or work orders
- Client correspondence
These records help establish the commercial and payment trail.
GST Refund on Services Provided to Foreign Clients
An exporter supplying services under LUT may accumulate eligible input tax credit on business inputs and input services. Subject to the prescribed conditions, the exporter may apply for a refund of unutilised ITC. The GST refund provisions prescribe the method for calculating the refund of unutilised ITC relating to zero-rated supplies made without payment of tax.
Before filing a refund claim, businesses should ensure that their:
- Export invoices
- GST returns
- ITC records
- Payment documents
- Books of account
- Refund application details
are properly reconciled.
Accurate reconciliation can help reduce discrepancies and compliance queries. Refund applications must generally be filed within 2 years from the relevant date (typically the date of receipt of payment in convertible foreign exchange).
Documents to Maintain for GST Export Services
| Document | Purpose |
| GST Registration Certificate | Establishes GST registration details |
| LUT | Supports export without payment of IGST |
| Export invoice | Records the service and export endorsement |
| Service agreement/work order | Establishes the scope and terms of service |
| Bank/payment records | Supports receipt of export proceeds |
| Foreign client details | Helps establish recipient location |
| GST returns | Records export supplies |
| ITC records | Supports eligible refund claims |
| Refund documents | Supports the refund application |
Maintaining these documents systematically can make the GST reconciliation and verification easier.
Final Takeaway
GST on foreign clients depends primarily on whether the service qualifies as an export of services under the IGST Act. For a qualifying export, the supply can be zero-rated. Eligible businesses commonly use LUT to provide services without payment of IGST and, subject to the applicable provisions, claim a refund of eligible unutilised ITC.
Businesses serving overseas customers should pay particular attention to place of supply, payment requirements, invoice wording, LUT compliance, GST return reporting and documentation. If your business regularly serves foreign clients, professional GST guidance can help you manage export invoices, LUT, returns and refund claims correctly.
Providing services to foreign clients?
Get expert assistance with GST registration, LUT filing, export invoicing and GST compliance for international services.
Frequently Asked Questions
1. Do I need to charge GST to a foreign client?
If your service qualifies as an export of services and you supply it under LUT without payment of IGST, you normally do not charge IGST to the foreign client. However, all the statutory export conditions must first be satisfied.
2. Is GST registration mandatory for receiving foreign payments?
Receiving foreign payments by itself does not determine the GST registration. Registration depends on the applicable GST provisions, including the nature and value of supplies and other relevant conditions.
3. Can I claim a GST refund for services provided to foreign clients?
Yes. Eligible exporters making qualifying zero-rated supplies under LUT may claim a refund of unutilised eligible ITC, subject to the applicable conditions and refund rules.
4. Can a foreign client pay an Indian company in Indian rupees?
Yes, Indian-rupee receipts can satisfy the export-of-services payment condition where such receipt is permitted under applicable RBI provisions. The specific payment arrangement should therefore be checked.
5. Is every service provided to a foreign company zero-rated?
No. A foreign customer does not automatically make a service an export. The transaction must satisfy the conditions under Section 2(6) of the IGST Act, including the applicable place-of-supply and payment requirements. Certain services may also be subject to specific place-of-supply rules.
