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Scan for outdated or missing drivers - takes under a minuteDriver Scan →Repair Windows errors before they cause bigger problemsFix Now →A service supplied by an Indian business to a customer abroad qualifies as an export of services for GST only if it meets all five conditions in section 2(6) of the IGST Act, 2017. The place-of-supply rule is often decisive: a specific statutory exception can put the place of supply in India even when the customer is overseas. If the service qualifies, it is zero-rated, and the current section 16 framework generally provides for supply without payment of IGST under a bond or Letter of Undertaking (LUT), with a refund claim for eligible unutilised input tax credit, subject to the applicable law and conditions.
Check all five export-of-services conditions
Section 2(6) of the IGST Act defines an “export of services” through five cumulative conditions. All five must be satisfied for the particular supply; a foreign customer, foreign-currency invoice or online delivery does not establish export status on its own.
- The supplier is located in India. Identify the supplier for GST purposes and establish its location in relation to the supply.
- The recipient is located outside India. Identify the recipient under the contract and relevant transaction records; do not assume that the person who pays is necessarily the recipient.
- The place of supply is outside India. Determine this under the applicable IGST Act rule. Section 13(2) is the cross-border default, but the exceptions in section 13 can change the result.
- Payment is received in an allowed form. The statutory test permits receipt in convertible foreign exchange, or in Indian rupees wherever the Reserve Bank of India permits it. Retain evidence supporting the payment route and receipt.
- Supplier and recipient are not merely establishments of a distinct person. Apply Explanation 1 to section 8 of the IGST Act to the relationship and establishments involved; a transaction between qualifying establishments of the same person does not meet this condition.
Assess the law applicable to the supply date. Before deciding, assemble the service description and scope, contract, recipient and establishment details, facts about where and how the service is performed, invoice, payment evidence and supply dates. Those facts help establish both the recipient and the correct place-of-supply classification.
Determine the place of supply under section 13
Start with the recipient-location default
For a supply of services where the supplier or recipient is outside India, section 13(2) generally places the supply at the recipient’s location. If the recipient’s location is not available in the ordinary course of business, the default is the supplier’s location. For an Indian supplier, that default can support the third export condition when the recipient is abroad—but only if no more specific rule applies.
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Check whether a statutory exception displaces the default
Section 13 contains exceptions for particular kinds of services. Among the relevant categories are services requiring goods to be physically made available, or requiring the recipient or a person acting for the recipient to be physically present with the supplier; services directly related to immovable property; admission to or organisation of specified events and ancillary services; and certain supplies involving multiple locations, including locations in India. The Act also provides a specific place-of-supply rule for intermediary services in section 13(8)(b), locating the supply at the supplier’s location.
If the applicable exception places the supply in India, the third export condition is not met, even if the customer is located abroad. The service’s legal and commercial character depends on the contract and what the supplier actually undertakes, not just the wording of an invoice or the parties’ preferred label. Confirm the operative statutory text for the transaction date before relying on a classification.
Distinguish a cross-border customer from an export
For example, a business cannot conclude that an online service is an export simply because it delivered work remotely to a foreign client. It must identify the service being supplied, test the recipient and supplier locations, apply the relevant section 13 rule, and then satisfy the payment and distinct-establishment conditions. CBIC’s sectoral FAQ frames a related question as: “How do I determine whether IT services provided by me constitute export of service?” The answer still depends on the facts and applicable statutory rule for that service.
Understand zero-rating and the available route
Section 16 of the IGST Act treats export of services as a zero-rated supply. Zero-rated treatment is not the same as treating the service as exempt: eligible input tax credit may remain available, subject to statutory restrictions and the refund rules.
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The CBIC Tax Information portal’s section 16 text reflects an amendment made by section 153 of the Finance (No. 2) Act, 2024, dated 16 August 2024, and also displays superseded language. Under the amended text described there, a registered person making a zero-rated supply may claim a refund of unutilised input tax credit for supplies made without payment of IGST under a bond or LUT, subject to section 54 of the CGST Act and the rules. Do not assume that older text on the portal makes a payment-of-IGST-and-refund route generally available. Any alternative must be checked against the applicable notified class, conditions and law for the relevant period.
Supply without payment of IGST under bond or LUT
CBIC guidance identifies a bond or LUT under Rule 96A for supplies made without payment of IGST. Treat the undertaking, invoice declarations, outward-supply reporting, payment-receipt timing and refund evidence as separate compliance matters. Check the current rule and GST portal instructions for the financial year and claim period rather than relying on a prior filing cycle’s process.
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Apply for an eligible unutilised-ITC refund
CBIC refund rules provide for an electronic application in Form GST RFD-01 and set out the calculation framework for refunds of unutilised ITC on zero-rated supplies made without payment of tax. For services, the refund-value calculation takes account of:
- payments received during the relevant period for completed supplies;
- completed supplies paid for in advance during an earlier period; and
- advances received for supplies that were not completed during the relevant period, which are subtracted.
The calculation is not simply a percentage of export invoices. The applicable rule version, supporting documents and portal requirements determine how the claim is prepared and evidenced.
Build a defensible record before filing
Keep records that support each part of the export test and the tax treatment claimed. Organise them around the decision they substantiate:
- Nature and scope: contract, statement of work, service description, deliverables and relevant performance facts, to support how the supply is characterized.
- Parties and locations: recipient records and establishment details, along with evidence supporting the supplier’s location and the recipient’s location.
- Place of supply: a record of the section 13 rule applied and the facts that led to that conclusion, including any relevant exception.
- Payment: invoices and evidence of receipt in convertible foreign exchange or permitted Indian rupees.
- Zero-rating and refund: the bond or LUT, invoice declarations, outward-supply reporting, returns, ITC records and refund workings relevant to the claim period.
Review these records against the transaction date, the applicable statutory version and the rules in force for the filing period. A correct export conclusion and a complete refund claim are related but separate tasks: meeting the export definition does not by itself establish the amount or documentary sufficiency of an ITC refund.
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