If you have a valid Letter of Undertaking (LUT) for the current financial year, you can bill a foreign client with zero IGST. The invoice has to carry the line "Supply meant for export under LUT without payment of IGST" and meet the export conditions. If you don't have an LUT, you charge IGST on the export invoice, pay it, and then claim it back as a refund.
That's the whole idea. The rest of this guide covers the details that trip people up: filing the LUT, what goes on the invoice, which currency and exchange rate to use, place of supply, and how these invoices go into GSTR-1.
Step 1: Check that your sale really is an "export"#
Before thinking about the LUT, make sure the sale counts as an export under GST. For services, all of these usually need to be true:
- You (the supplier) are in India.
- Your client is outside India.
- The place of supply is outside India.
- You are paid in convertible foreign exchange (or in Indian rupees where RBI allows it).
- You and your client are not just two branches or offices of the same company.
Take a Pune design agency billing a London startup for a website, paid in GBP into its bank account. That's a typical export of services.
Now take a Jaipur consultant who connects Indian buyers with a US supplier and gets a commission from the US company. That may count as intermediary services. For those, the place of supply is usually in India, so it is not an export, even though the money comes from abroad. Services done on goods physically in India, or linked to property or events in India, can also have special place-of-supply rules.
If you are not sure, ask your CA before raising the invoice. Getting this wrong means GST was due when you thought it wasn't.
For goods, an export means the goods actually leave India, backed by a shipping bill (or the courier/postal equivalent).
Step 2: File or renew your LUT (Form GST RFD-11)#
An LUT is a simple online undertaking. You promise to follow the export rules, and in return you can export without paying IGST upfront.
How to file it:
- Log in to the GST portal.
- Go to Services → User Services → Furnish Letter of Undertaking (LUT).
- Pick the financial year you are filing for.
- Fill in the details, including two independent witnesses (name, address, occupation).
- Sign with DSC or EVC and submit.
- Download the acknowledgement (ARN) and keep it safe. Many exporters quote the LUT ARN on their invoices too.
Key points:
- An LUT is valid for one financial year. Last year's LUT doesn't carry over. Renew it every year.
- File it before the first export invoice of the year. The usual habit is to file in March for the coming April–March year.
- Most registered businesses can file an LUT. A business that has been prosecuted for certain tax offences may have to give a bond instead. Check the current conditions on the GST portal.
- A common mistake: a Kochi software firm raises "LUT" invoices in April and May, then realises in June that the LUT was never renewed. Talk to your CA quickly if this happens to you. Those invoices may be treated as exports without a valid LUT.
Step 3: Make sure the invoice has the right details#
An export invoice is a normal tax invoice with a few extra details. Here's what to check.
The declaration (most important):
SUPPLY MEANT FOR EXPORT UNDER LETTER OF UNDERTAKING WITHOUT PAYMENT OF INTEGRATED TAX
If you are paying IGST instead, the line becomes:
SUPPLY MEANT FOR EXPORT ON PAYMENT OF INTEGRATED TAX
Other fields to include:
- Your name, address and GSTIN
- A unique invoice number and the invoice date
- Client's name and full address, including country
- Place of supply (for exports, the client's country / "Outside India")
- Description of the service or goods, with SAC/HSN code
- Value, currency and quantity (for goods)
- IGST rate and amount shown as zero (LUT route), or the actual IGST (with-IGST route)
- LUT ARN and date (common practice, and helpful at refund time)
- For goods: port code, and shipping bill number and date once you have them
Currency and exchange rate. You can bill your client in USD, EUR, GBP or any currency you agreed on. For GST reporting, though, the value has to be converted to rupees. Many businesses show both amounts on the invoice. For example: "USD 2,000 (₹ equivalent at the rate on the invoice date)".
The rule for which exchange rate to use is different for goods and services. Goods usually follow the customs-notified rate, and services follow the rate on the date of supply as per accounting standards. Pick the right method with your CA and use it the same way every time. Using the right rate also makes matching with your bank's foreign inward remittance certificate (FIRC/e-BRC) much easier.
Step 4: LUT or pay IGST and claim a refund?#
Most service exporters should simply use the LUT. But the with-IGST route has its uses.
| Under LUT (without IGST) | With IGST (claim refund) | |
|---|---|---|
| IGST on invoice | Zero | Charged at the applicable rate |
| Cash flow | No tax paid upfront | Tax paid first, refund comes later |
| Refund claimed | Unused input tax credit (ITC), if any | The IGST you paid |
| Refund process (goods) | Refund application for ITC | Usually processed through the shipping bill and GSTR-1/3B data |
| Refund process (services) | Refund application for ITC | Refund application on the portal |
| Best for | Most freelancers, agencies, IT and design firms | Cases where no LUT is in place, or where your CA prefers this route for your ITC position |
When the with-IGST route can make sense:
- You missed filing the LUT and need to bill now.
- You have a lot of ITC piling up. Paying IGST from that credit and getting a cash refund can sometimes be cleaner. Some goods have special restrictions here, so check with your CA first.
For a Ludhiana garment exporter shipping ₹8 lakh of goods to Dubai, both routes are possible, but the cash-flow impact is very different. For a Bengaluru agency billing ₹3 lakh a month to a US client, the LUT is almost always simpler.
Step 5: Get paid within the allowed time#
Zero-rating has a condition: the money has to actually reach you. For services, the foreign exchange has to come in within the time the rules allow, plus any extension RBI grants. If it doesn't come in by then, you may have to pay the IGST with interest. You can generally get that back once the payment arrives.
So:
- Keep FIRCs / e-BRCs for every export invoice.
- Match each foreign payment to its invoice. A ₹1,65,000 receipt (after bank charges) against a ₹1,68,000 invoice is normal, but record the difference properly.
- Chase overdue foreign clients the same way you chase Indian ones.
Step 6: Report export invoices in GSTR-1 (Table 6A)#
Export invoices go in Table 6A (Exports) of GSTR-1, not with your regular B2B or B2C invoices.
For each invoice you report:
- Export type: WOPAY (without payment of tax, the LUT route) or WPAY (with payment of tax)
- Invoice number, date and value
- Port code, shipping bill number and date (for goods. Leave these out for services)
- Taxable value, and the IGST rate and amount if paid
The same exports also go in GSTR-3B under zero-rated supplies. The two returns should match.
Tips for your CA's sanity:
- Use a separate invoice series for exports, such as EXP/25-26/001. It makes Table 6A easy to put together.
- Don't put export invoices in B2B just because the client is a company.
- If you change an export invoice later, use a credit note or an amendment. Don't quietly edit the original.
Keeping all of this straight by hand is a pain once you have more than a few foreign clients. In Clyrix, you can raise export invoices under LUT or with IGST, and the GSTR-1 export your CA gets keeps them apart from your domestic invoices.
A quick checklist before you hit "send"#
- The sale really is an export (place of supply outside India, foreign client, foreign-exchange payment)
- LUT filed for this financial year, with the ARN saved
- Correct declaration line on the invoice
- Client's country and full address on the invoice
- Currency shown, rupee value worked out with a consistent exchange rate
- IGST at zero (LUT) or charged correctly (with-IGST route)
- Separate export invoice series
- Invoice reported in GSTR-1 Table 6A with the correct WPAY/WOPAY type
- FIRC/e-BRC saved once the money comes in
Get these right and your export invoices stay zero-rated. That means no GST you didn't need to pay, and no scramble at refund or audit time.
