A service supplied from India qualifies as an export under GST only when it satisfies all five conditions in section 2(6) of the Integrated Goods and Services Tax Act (IGST Act). A customer’s foreign address is not enough: the place-of-supply rules, payment route and relationship between the parties also matter. A qualifying export is zero-rated, but that does not make a refund automatic.
This guide explains how to test a service arrangement, why intermediary services need particular care, and what the LUT and refund routes require. It describes the statutory framework generally; apply the current consolidated law, rules and RBI permissions to the specific transaction before filing or relying on an export treatment.
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What counts as an export of services?
Section 2(6) of the IGST Act defines an export of services through five cumulative conditions. In practical terms, you must establish where the supplier and recipient are located, determine the place of supply under the correct cross-border rule, verify that consideration is received through a permitted route, and check that the parties are not merely establishments of the same person. Every condition must be met. If even one fails, the supply is not an export of services under that definition.
This is why an invoice addressed to a foreign company, a contract governed by foreign law, or payment arriving from abroad cannot independently settle the GST classification. The underlying service and the relevant establishments must be examined alongside the invoice and payment evidence.
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| Condition | What to establish | Common point to check |
|---|---|---|
| Supplier is in India | The supplier’s location under the IGST Act | Identify the establishment relevant to the supply; do not assume an invoicing address alone decides it. |
| Recipient is outside India | The location of the person receiving the service, including the relevant establishment | Confirm which establishment actually receives the service, rather than relying only on the contracting entity’s registered address. |
| Place of supply is outside India | The result under the applicable provision of IGST Act section 13 | Check whether a specific exception, including the intermediary rule, displaces the general recipient-location rule. |
| Qualifying consideration is received | Receipt in convertible foreign exchange or Indian rupees wherever permitted by RBI | Verify permission for the actual rupee route and transaction; not every rupee receipt qualifies. |
| Supplier and recipient are not merely establishments of a distinct person | The legal and establishment relationship between the parties | Review arrangements involving a foreign branch or head office, which may be a distinct establishment of the same legal person. |
How to work through the five conditions
1. Identify the supplier and the relevant establishment
Start with the person making the supply and establish its location under the IGST Act. A company can operate through more than one establishment, so the practical question is not simply which address appears on the invoice. Map who undertakes the work, which establishment supplies it, and which establishment is relevant to the service arrangement.
2. Identify the recipient, not just the payer
Determine who receives the service and where the relevant recipient establishment is located. The party that signs a contract or remits funds may not, by itself, answer which establishment receives the service. Record the facts supporting your conclusion, including the contract, scope of work, communications and service-delivery arrangements.
3. Classify the place of supply under section 13
For services supplied across borders, section 13 generally places the supply at the recipient’s location unless a listed exception applies. Apply the specific clause that fits the service. Do not treat a billing address, foreign currency invoice or customer residence as a substitute for that legal analysis.
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The statutory test refers to consideration received in convertible foreign exchange or in Indian rupees wherever permitted by RBI. If payment is in rupees, establish that RBI permits the relevant arrangement and that the applicable GST rule recognizes the route. A rupee-denominated invoice or payment does not automatically satisfy the condition. Keep evidence tying the receipt to the relevant invoice and service.
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5. Examine whether the parties are distinct establishments
The export definition excludes a supply between establishments of a distinct person. This requires particular care where a foreign head office, branch or other establishment is involved. Map the legal person and each establishment involved in supplying and receiving the service; do not infer eligibility simply because the supply crosses a national border.
Why place of supply creates intermediary risk
The general section 13 rule is subject to exceptions. One important exception is for intermediary services: the place of supply is the supplier’s location. If the intermediary is in India, that result can prevent the supply from meeting the export condition that the place of supply be outside India, even when the customer is abroad.
The label “intermediary” should not be applied automatically to every agent, broker, contractor or technology provider. Examine what the provider actually does, who the parties are, what supply is being arranged or facilitated, and whether the provider is making its own principal supply or facilitating another person’s supply. The contract is relevant evidence, but its terminology alone does not determine the classification.
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CBIC’s sectoral FAQ illustrates the risk with brokerage supplied by a stockbroker to non-resident clients: where the stockbroker acts as an intermediary, the place of supply is in India and the supply is treated as taxable. This is an example of applying the rule to those facts, not a universal conclusion for every cross-border service provider.
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IT and IT-enabled services
For IT and IT-enabled service arrangements, CBIC Circular 107/26/2019-GST says classification depends on the facts and circumstances, including which supply is principal or main. Describe the real service flow rather than relying on a broad label such as “software services,” “consulting,” “outsourcing” or “commission.” If a provider performs work for its customer and also arranges a separate supply, analyze those activities and their roles rather than assuming the entire arrangement has one classification.
CBIC’s sectoral FAQ frames a useful starting question as: “How do I determine whether IT services provided by me constitute export of service?” The answer requires applying the statutory test to the actual service and transaction facts.
What zero-rating means—and what it does not
Exports that meet the statutory requirements are zero-rated under section 16 of the IGST Act. Zero-rating is the tax treatment of a qualifying supply; it does not by itself establish that a supply qualifies, nor does it guarantee that the exporter will receive a cash refund in a particular amount. Refund eligibility, records, calculations and restrictions still apply.
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For registered taxpayers, the broad route choices are to export without payment of IGST under a bond or Letter of Undertaking (LUT), or to pay IGST and claim a refund where the law and applicable conditions permit. The route available for a particular service exporter should be checked against the current Act, rules, restrictions and safeguards. Do not assume that paying IGST and seeking a refund is available in every case.
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| Route | What happens | Key requirements and considerations |
|---|---|---|
| Export without payment of IGST under LUT or bond | The registered exporter furnishes the required bond or LUT before export and may claim a refund of eligible unutilized input tax credit. | Refund is subject to section 54, the CGST Rules, restrictions and the prescribed calculation. The credit refund is not necessarily equal to all input tax paid. |
| Pay IGST and claim refund | The exporter pays IGST and seeks a refund under the statutory route. | The Act provides this route subject to applicable conditions and safeguards. Confirm current eligibility for the transaction before choosing it. |
How the LUT route works and when payment is due
Under rule 96A of the CGST Rules, a registered person choosing to export services without payment of IGST must furnish a bond or LUT in Form GST RFD-11 before export. The timing matters: it is a procedural step to complete before the export, not a document to assume can be supplied afterward without consequence.
For exported services, rule 96A provides that if payment is not received within one year from the date of the invoice—or within a further period allowed by the Commissioner—the exporter must pay the tax and interest within the period prescribed by the rule. Apply the rule’s current consolidated wording to the particular invoice, payment route and any extension. The rule also refers to Indian rupees wherever permitted by RBI, so a rupee receipt must still satisfy the applicable permission and GST requirements.
Refund claims: records, calculation and reconciliation
For a refund claim, CBIC’s refund rules call for invoice details and relevant Bank Realization Certificates (BRCs) or Foreign Inward Remittance Certificates (FIRCs) in service-export cases. Refund applications are filed electronically. Under the LUT route, a refund of accumulated input tax credit is calculated using the prescribed formula and is not necessarily the total amount of input tax paid.
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Keep a coherent file for each arrangement so that the export classification, payment and refund claim can be reconciled. Useful records include:
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- Contracts, statements of work and other material describing the service and the parties’ roles.
- Evidence of the supplier’s and recipient’s relevant locations and establishments.
- Invoices and records identifying the service and linking it to receipts.
- Bank and remittance evidence, including applicable BRCs or FIRCs, and evidence supporting any RBI-permitted rupee payment route.
- The LUT or bond documentation and records of when it was furnished.
- Return data and refund computations reconciled to invoices, eligible input tax credit and payment records.
Incomplete or inconsistent evidence can make a refund claim difficult to substantiate even where the underlying service appears to meet the export definition. Confirm the prescribed documentation and computation rules for the claim period rather than treating a certificate or invoice as a substitute for the full record.
A practical review before treating a service as an export
Before applying zero-rating or making a refund claim, review the transaction in a fixed sequence. This helps surface a place-of-supply or payment issue before it becomes a filing problem.
- Map the parties and establishments. Identify the supplier, recipient and relevant establishment for each, including any branch or head-office relationship.
- Describe the service as performed. Set out what the Indian provider does, for whom, and whether it supplies its own service or arranges or facilitates another supply.
- Select the section 13 place-of-supply rule. Begin with the general recipient-location rule for cross-border services, then assess relevant exceptions, especially intermediary treatment.
- Test the consideration route. Determine whether the receipt is in convertible foreign exchange or in rupees through a route permitted by RBI and recognized under the applicable GST rule.
- Choose and complete the tax route. If using LUT or bond, furnish Form GST RFD-11 before export; if considering payment of IGST and refund, confirm that the route is currently available for the specific supply.
- Keep the evidence together. Reconcile contracts, invoices, location evidence, payment documents, LUT records, returns and refund calculations.
- Track the service-payment deadline. For the LUT route, monitor the rule 96A one-year period from invoice and any further period allowed by the Commissioner.
A foreign client, a contract description or the currency of payment may be useful evidence, but none should be used as a shortcut around the five-condition test. For an arrangement with multiple establishments, facilitation activities, or a nonstandard payment route, obtain transaction-specific GST advice before adopting an export position.
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