Export invoice under LUT: format for exporting services without IGST

Selling services to clients abroad — design work for a US agency, software for a European startup, consulting for a company in Dubai — is one of the most common things India's freelancers and small firms do. Under GST, these exports are zero-rated: with a letter of undertaking (LUT), you don't charge IGST at all, and the invoice says so.

This guide covers when a supply counts as an export of services, how the LUT works, what the export invoice must show, and the mistakes that cost exporters their zero rating. The free GST invoice generator has an "Export — under LUT" supply type that prints the right endorsement.

When is it an export of services?

Under the IGST Act, a supply of services is an export only when all five conditions hold:

1. You (the supplier) are located in India.
2. The recipient is located outside India.
3. The place of supply is outside India.
4. You are paid in convertible foreign exchange, or in Indian rupees where the Reserve Bank of India permits it.
5. You and the recipient are not just two establishments of the same person — for example, your own branch abroad.

The third condition is the one people miss. For most services the place of supply is the recipient's location, so a client abroad means a place of supply abroad. But services tied to property in India, services performed on goods physically in India, and a few other categories have their place of supply in India even when the client is overseas. Those are not exports, and GST applies.

Two ways to export: with or without IGST

Most small exporters use an LUT because it keeps money out of a refund queue. Either way, the input tax credit on your costs can be claimed back as a refund, because zero-rated supplies are not meant to carry GST.

Filing the LUT

The LUT is filed on the GST portal in Form GST RFD-11, under the refund services. It is:

• Online and free — there's no bond or bank guarantee for most exporters.
• For one financial year (April to March), so it must be renewed before the first export of the next year.
• Acknowledged with a reference number (ARN), which is worth printing on your export invoices so your client's and your own records tie up.

Exporters prosecuted for serious tax evasion can't use an LUT and must furnish a bond instead.

What the export invoice must show

An export invoice is a tax invoice with a few additions. It needs everything on the GST invoice format list, plus:

• The endorsement required by rule 46. Under an LUT the invoice must carry: "Supply meant for export / supply to SEZ unit or SEZ developer for authorised operations under bond or letter of undertaking without payment of integrated tax". With payment of IGST, the ending reads "on payment of integrated tax".
• The recipient's name and address abroad, including the country.
• Place of supply: "Outside India" — printed with code 96 on GST documents.
• SAC code of the service and the value of each line.
• No IGST charged under LUT — the tax columns show nil or are left out, and the total is the value of the service.

The recipient has no GSTIN, so that field stays empty. Keep the invoice number in your regular series; exports don't need a separate one.

Example: a Bengaluru studio billing a US client

A design studio in Karnataka invoices a New York agency ₹1,20,000 for a brand identity project, under a valid LUT.

Getting paid, and what happens if you aren't

The zero rating depends on the money actually arriving in foreign exchange. Keep the bank's foreign inward remittance advice or certificate for each export invoice: it is your proof that the conditions were met, and you need it for refund claims.

If an export invoice stays unpaid beyond the period the rules allow, the supply loses its zero rating for the time being and IGST becomes payable with interest. The tax can be recovered once the payment is received. For anything close to that limit, speak to your chartered accountant.

Common mistakes on export invoices

• Charging IGST under an expired LUT — or, worse, not charging it without any LUT at all. Renew the LUT every April.
• Leaving out the endorsement, which makes a zero-rated invoice look like a domestic one missing its tax.
• Treating services on property in India as exports.
• Invoicing your own branch abroad as if it were a client.
• Being paid in rupees through an Indian intermediary in a way that doesn't count as foreign exchange.

How Invoice Native handles exports

• Choose Export — under LUT (no IGST) or Export — with payment of IGST as the supply type.
• The place of supply becomes "Outside India", and the client's address can be abroad.
• Under LUT, no tax is charged, the endorsement is printed, and your LUT reference prints when you add it in your business details.
• With payment, the full rate is charged as IGST.
• An export invoice can be in US dollars, euros, pounds, Australian, Canadian or Singapore dollars, or dirhams. Enter the exchange rate and the rupee value prints on the invoice and counts in your GST report.

For how exports fit next to domestic sales, see CGST, SGST or IGST. As with any tax question, check anything unusual with a chartered accountant.