Indian freelancers, developers, designers and consultants working with clients abroad are in an unusual spot under GST — their services are "exports" and taxed at zero rate, but the rules around registration, invoicing and getting that zero rate to actually apply confuse most people who've never dealt with them. Here's how export of services works in plain terms, and when a Letter of Undertaking (LUT) makes sense.
Quick Summary
- GST registration: not compulsory below ₹20 lakh turnover (₹10 lakh in special category states), even for export income
- Export of services: zero-rated — no GST charged to the foreign client, if the 5 conditions under Section 2(6) IGST Act are met
- LUT (Form RFD-11): lets a registered exporter invoice with zero GST, no cash blocked — valid for one financial year, renew annually
- Without LUT: must charge 18% IGST, pay it, then claim a refund separately — slower, ties up cash
- Proof needed: FIRC/BRC from your bank showing payment received in foreign exchange
What Counts as "Export of Services"
Under Section 2(6) of the IGST Act, all five of these must be true for your income to qualify as an export (and therefore zero-rated) rather than a normal taxable supply:
- Supplier (you) is located in India
- Recipient (your client) is located outside India
- Place of supply is outside India
- Payment is received in convertible foreign exchange, or in Indian rupees where RBI specifically permits
- Supplier and recipient are not merely two establishments of the same legal person (e.g. an Indian branch invoicing its own overseas head office generally does not qualify)
Do You Need to Register for GST?
This is the most common confusion. Export is legally treated as an inter-state supply under the IGST Act, and inter-state suppliers normally must register regardless of turnover. But Notification No. 10/2017-Integrated Tax specifically carves out an exception:
The Rule Most Freelancers Get Wrong
Persons making inter-state supplies of taxable services (this includes export of services) are exempt from compulsory GST registration as long as their aggregate all-India turnover stays below ₹20 lakh (₹10 lakh in special category states). This is different from goods — an inter-state supplier of goods must register regardless of turnover. If you're a freelancer earning purely from services and below this threshold, you are not legally required to register, even though you're technically making an inter-state (export) supply.
That said, plenty of freelancers register voluntarily even below the threshold — mainly to claim ITC refunds on business expenses, to file a LUT and invoice cleanly with zero GST shown, and because many overseas clients and payment platforms feel more comfortable with a GSTIN on the invoice.
LUT vs Paying IGST and Claiming Refund
| Route | How It Works | Cash Flow Impact |
|---|---|---|
| With LUT (Form RFD-11) | Invoice client with zero GST charged, no tax paid upfront | None — no cash blocked |
| Without LUT | Charge and pay 18% IGST on the invoice, then file for a refund | Cash tied up until refund is processed (often weeks) |
Almost every registered freelancer or small exporter opts for LUT for exactly this reason — there's no upside to blocking your own cash with the government when a simple annual filing avoids it entirely. LUT eligibility is broad (any GST-registered exporter can file it); the only real bar is for someone previously prosecuted for tax evasion above ₹2.5 crore, who must furnish a bond with bank guarantee instead.
LUT — Key Facts
- Filed as Form GST RFD-11 on the GST portal
- Valid for one financial year only (1 April – 31 March) — must be renewed every year before invoicing exports under it
- Filing is fully online, takes about 10–15 minutes with Aadhaar e-verification
- No fee, no physical documents to submit in the normal case
Documentation to Keep
- Export invoice marked "Supply meant for export under LUT without payment of IGST"
- FIRC or BRC from your bank for every payment received — this is your proof of foreign exchange receipt
- Contract or agreement/email trail with the client showing the nature of services and their location outside India
GST Registration & LUT Filing Support
Rajput Lalit & Associates helps freelancers and consultants with foreign clients decide whether to register, complete GST registration, file LUT annually, and reconcile ITC refunds where applicable. Book a free consultation or see our GST Registration service.
Frequently Asked Questions
Does a freelancer with foreign clients need GST registration?
Not compulsorily, as long as aggregate turnover stays below ₹20 lakh in a financial year (₹10 lakh for special category states). Export of services counts as an inter-state supply under the IGST Act, but Notification No. 10/2017-Integrated Tax specifically exempts service providers making inter-state supplies from compulsory registration below this threshold. Many freelancers still register voluntarily — see below for why.
What exactly counts as 'export of services' under GST?
Five conditions must all be true under Section 2(6) of the IGST Act: the supplier 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 Indian rupees where RBI permits), and the supplier and recipient are not merely establishments of the same legal entity. Miss any one — for example, an Indian company's own overseas branch — and it isn't treated as an export for GST purposes.
If export of services is zero-rated, why would I still register for GST?
Three practical reasons: you can claim Input Tax Credit on business expenses (software subscriptions, laptop, internet, office rent) and get that back as a refund since exports are zero-rated; you can file a Letter of Undertaking (LUT) to invoice without charging any GST at all, which clients prefer; and once your turnover naturally crosses ₹20 lakh, you'll need to register anyway — starting early avoids a scramble later.
What is a LUT and how is it different from paying IGST and claiming a refund?
A Letter of Undertaking (Form GST RFD-11) lets a GST-registered exporter invoice foreign clients with zero GST charged, with no cash outflow. Without a LUT, you'd have to charge and pay 18% IGST on the invoice first, then apply separately for a refund — which ties up cash for weeks or months. Almost all freelancers and small exporters opt for the LUT route once registered.
How long is a LUT valid, and do I need to renew it?
One financial year (1 April to 31 March). It must be filed fresh every year before you invoice any export under it for that year — there's no automatic rollover. Filing is done online on the GST portal and typically takes 10–15 minutes with Aadhaar-based e-verification.
What proof do I need to show that my income is genuinely export income?
Primarily the Foreign Inward Remittance Certificate (FIRC) or Bank Realisation Certificate (BRC) from your bank, showing payment received in convertible foreign exchange against a specific invoice. Keep these matched against your invoices — they're the document GST officers and your bank will ask for, and they're also what supports any ITC refund claim.
Disclaimer: This article is for general information based on the IGST Act, 2017, CGST Rules and Notification No. 10/2017-Integrated Tax as of September 2026. Registration thresholds, LUT procedure and RBI-permitted payment routes can change — please verify the current position or consult a professional for your specific situation before relying on it.