GST on exports: export of services and goods, LUT, SEZ and merchant exports

There is no GST on exports when you follow the rules. Exports of goods and services are zero rated: you either export under a Letter of Undertaking (LUT) without paying IGST, or you pay IGST and get it back as a refund. A service is an export of services under GST only when all five conditions in section 2(6) of the IGST Act are met.

You also keep the GST you paid on your purchases, called input tax credit (ITC), and you can get unused credit back as a refund. This guide covers what counts as an export, the two ways to export, GST registration for exporters and freelancers, the export invoice, merchant exports at 0.1%, supplies to SEZ units, refunds and returns. We checked every rule on this page against the law on 22 October 2026.

What counts as an export under GST

Export of goods. The IGST Act says export of goods "means taking goods out of India to a place outside India" (section 2(5)). The goods must actually leave India. If you sell to a foreign company but hand over the goods in India, that is not an export of goods.

Export of services. A service is an export only when all five conditions in section 2(6) of the IGST Act are met. If even one fails, it is a normal sale of services in India and GST applies.

Examples of service exports (if all five conditions are met): software made in India for a company in the USA, design work for a client in the UK, consulting for a firm in Dubai, back office work for a company in Australia.

Group companies. An Indian company and a foreign company are separate persons, even in the same group. So services by an Indian subsidiary to its foreign parent can be an export, if the other conditions are met. Services by an Indian branch of a foreign company to the same company abroad are not exports (CBIC Circular 161/17/2021-GST).

Exports are zero rated. Section 16 of the IGST Act makes exports and SEZ supplies "zero rated". Our guide to zero rated, nil rated and exempt supplies explains what that means and how it differs from exempt goods.

Agents and intermediaries: new rule from 30 March 2026

An intermediary is "a broker, an agent or any other person" who arranges or helps a supply between two or more people, but does not supply the goods or services on their own account (section 2(13), IGST Act). For example, an Indian agent who finds suppliers in India for a buyer in Germany and earns a commission.

• Before 30 March 2026: the place of supply of intermediary services was the intermediary's own location (section 13(8)(b), IGST Act). So an Indian agent was in India, the place of supply was India, and the service could not be an export. GST was payable even when the client was abroad.
• From 30 March 2026: the Finance Act, 2026 removed section 13(8)(b). Intermediary services now follow the normal rule: the place of supply is where the client is (section 13(2)). So an Indian agent working for a foreign client can now make an export of services, if all five conditions above are met.

Our reading: invoices issued before 30 March 2026 follow the old rule. If you paid GST on intermediary services in earlier years, ask a CA before you claim anything back.

Two ways to export: LUT or pay IGST

Every exporter picks one of two ways, for each export.

Time limits under an LUT (rule 96A of the CGST Rules).

• Goods must leave India within 3 months from the date of the export invoice.
• Payment for services must reach you within 1 year from the date of the export invoice, in foreign currency or in rupees where the RBI allows it.
• If you miss the limit, you pay the IGST with interest within 15 days after it ends. The tax officer can allow more time.

Goods with export duty. A few goods carry customs export duty. For these, section 16(5) of the IGST Act gives no GST refund.

Which way should you choose? Our reading: an LUT suits most small exporters and freelancers, because no tax is paid upfront and only unused credit is claimed back. Paying IGST can suit an exporter of goods who already has a large ITC balance to pay it with, because the IGST refund on goods moves with the shipping bill.

The LUT is valid for the whole financial year in which you file it, so file a new one every year before your first export. Our step by step guide on how to file an LUT shows the RFD-11 steps on the GST portal.

Do exporters need GST registration?

Exporters of goods: yes, from the first export. Exports are inter-State supplies (section 7(5), IGST Act). Anyone making an inter-State taxable supply must register, whatever their turnover (section 24(i), CGST Act). The GST Council's FAQ on exports says: "Exports being inter-State supply, you would be required to obtain GST registration." Our reading: no turnover limit helps an exporter of goods, except a few special cases such as some handicraft goods.

Exporters of services: only above ₹20 lakh. Notification 10/2017-Integrated Tax frees people who make inter-State supplies of services from registration if their aggregate turnover is not more than ₹20 lakh in a financial year (₹10 lakh in special category States). Aggregate turnover counts your exports and all your sales in India together (section 2(6), CGST Act). Once it crosses the limit, you must register. See our GST registration guide for the limits in your State.

Composition dealers cannot export goods. The composition scheme is not open to anyone who makes inter-State supplies of goods (section 10(2)(c), CGST Act), and exports are inter-State supplies.

Importer-Exporter Code (IEC). To export goods you also need an IEC from the DGFT: "No export or import of goods shall be made by any person without obtaining an IEC unless specifically exempted" (Foreign Trade Policy 2023, para 2.05). For services, the policy asks for an IEC "for availing benefits under the Foreign Trade Policy". Our reading: a service exporter who does not claim those benefits does not need one. Our IEC registration guide explains how to get it.

GST for freelancers with foreign clients

Freelancers who work for clients abroad (designers, developers, writers, consultants) make exports of services when the five conditions are met. Here is what GST asks of them.

1. Check the five conditions. Your client must be outside India, and the money must come in foreign currency (or in rupees where the RBI allows it). Work for the Indian office of a foreign company is not an export.
2. Below ₹20 lakh a year: no registration needed. If your aggregate turnover (foreign and Indian work together) is not more than ₹20 lakh in the financial year (₹10 lakh in special category States), you do not have to register. Our reading: without registration you do not charge GST and you do not file an LUT.
3. Above ₹20 lakh, or if you register by choice: get GST registration, file an LUT before you bill, put the LUT wording on every export invoice, and show your exports in GSTR-1 (Table 6A) and GSTR-3B (row 3.1(b)).
4. Keep proof of every foreign payment. Your bank gives a certificate or advice for money received from abroad (FIRC or BRC). You need it for refund claims (rule 89(2)(c)), and if the money does not arrive within a year under an LUT, IGST becomes payable.

Example. Priya, a graphic designer in Pune, designs packaging for a company in London and is paid in pounds into her bank account. Her client is outside India, the place of supply is the client's location, and she is paid in foreign currency, so this is an export of services. Her total turnover this year is ₹14 lakh, so she does not need GST registration. If it grows past ₹20 lakh, she registers, files an LUT and keeps charging no GST to the London client.

GST zero rating does not change income tax. Your foreign income is still taxed under income tax. See our guide to ITR filing for freelancers.

Export invoice under GST: what it must show

An export invoice is a normal tax invoice under rule 46 of the CGST Rules, with three changes:

1. One of two lines (the endorsement), exactly as the rule says:
   • Under LUT or bond: "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"
   • On payment of IGST: "SUPPLY MEANT FOR EXPORT/SUPPLY TO SEZ UNIT OR SEZ DEVELOPER FOR AUTHORISED OPERATIONS ON PAYMENT OF INTEGRATED TAX"
2. The buyer's name and address, and the address of delivery.
3. The name of the country of destination.

These three replace the buyer's GSTIN and State details that a normal invoice shows.

Our reading: the rule does not ask for the LUT acknowledgement number, but many exporters write it on the invoice, and it helps when the officer checks a refund. The words in square brackets are for you to fill in; the invoice number and date are only an example.

Merchant exports and the 0.1% GST rate

A merchant exporter buys goods from a supplier in India and exports them. To help them, the supplier can charge only 0.1% GST on the sale to the merchant exporter: 0.05% CGST plus 0.05% SGST within a State (Notification 40/2017-Central Tax (Rate)), or 0.1% IGST between States (Notification 41/2017-Integrated Tax (Rate)).

The 0.1% rate applies only if all these conditions are met:

• the supplier issues a tax invoice;
• the merchant exporter exports the goods within 90 days from the date of that invoice;
• the merchant exporter is registered with an Export Promotion Council or a Commodity Board recognised by the Department of Commerce;
• the merchant exporter places an order on the supplier for goods at the concessional rate;
• the goods go straight from the supplier to the port, inland container depot, airport or land customs station (or to a registered warehouse first);
• the merchant exporter shows the supplier's GSTIN and invoice number on the shipping bill, and sends proof of export to the supplier and the supplier's tax officer.

If the goods are not exported within 90 days, the supplier loses the 0.1% rate. Our reading: the supplier then has to pay GST at the normal rate on that sale.

"0.1% GST on exports" is a common mix-up. There is no 0.1% tax on the export itself. The 0.1% is charged on the purchase by the merchant exporter. The export by the merchant exporter is zero rated, under an LUT or on payment of IGST, like any other export.

Supplies to a SEZ unit or developer

SEZ stands for Special Economic Zone. It has the same meaning as in the Special Economic Zones Act, 2005 (section 2(19), IGST Act). A SEZ unit is a business set up inside the zone; a SEZ developer builds and runs the zone.

A supply to a SEZ is zero rated, like an export. Section 16 of the IGST Act makes a supply of goods or services to a SEZ unit or developer zero rated, but only "for authorised operations" (these words apply from 1 October 2023). Authorised operations are the business the SEZ authorities have allowed that unit or developer to do in the zone. Our reading: ask your SEZ customer for a copy of its approval that lists its authorised operations, and keep it on file.

What this means for you as the supplier:

• It is an inter-State supply, even if the SEZ is in your own State (section 7(5), IGST Act). So if tax is paid, it is IGST, not CGST and SGST.
• Same two ways: supply under an LUT without paying IGST, or pay IGST and claim it back.
• Same invoice wording: the rule 46 lines above cover "SUPPLY TO SEZ UNIT OR SEZ DEVELOPER FOR AUTHORISED OPERATIONS".
• Refund needs the zone's stamp. For goods, you claim the refund after the goods have been "admitted in full" in the SEZ, as endorsed by the zone's specified officer. For services, you file the refund "along with such evidence regarding receipt of services for authorised operations" endorsed by that officer (rule 89(1); CBIC Circular 48/22/2018-GST).
• Returns: show SEZ supplies in GSTR-1 Table 6B, not 6A.

This page covers supplies to a SEZ. Sales by a SEZ unit into the rest of India follow other rules and are not covered here.

Deemed exports are not real exports

Deemed exports are supplies of goods made in India that do not leave India, but which the law treats like exports for some benefits (section 147, CGST Act). Only four kinds are notified (Notification 48/2017-Central Tax): goods supplied against an Advance Authorisation, capital goods against an EPCG Authorisation, goods supplied to an Export Oriented Unit (EOU), and gold supplied by a bank or public sector undertaking against an Advance Authorisation.

The big difference: deemed exports are not zero rated. GST is charged on the sale, they "cannot be supplied under a Bond/LUT", and the tax is claimed back later as a refund by either the supplier or the buyer (rule 89(1)). They go in GSTR-1 Table 6C. Our deemed exports guide explains the four types, the EOU procedure and how the supplier or the buyer claims the refund.

Refunds for exporters

How you get your money back depends on the way you exported.

Time limit: 2 years. You must claim within 2 years from the "relevant date" (section 54(1), CGST Act). For goods sent by sea or air, that is the date the ship or aircraft leaves India. For services, it is the date you receive the payment (or the invoice date, if you were paid in advance).

How fast. For zero rated supplies, the officer can pay 90% of the claim on a provisional basis (section 54(6)), and must decide a complete claim within 60 days (section 54(7)).

Coming, but not in force yet. The Finance Act, 2026 says the ₹1,000 minimum refund will not apply to refunds on goods exported on payment of tax, from a date the government will notify. As of 22 October 2026 it has not been notified, so the ₹1,000 minimum still applies.

Our reading: most refund delays come from a mismatch between your GSTR-1 export details and your shipping bills, or from missing payment proof. Our GST refund guide explains each step.

How to show exports in GSTR-1 and GSTR-3B

GSTR-3B row 3.1(b) is filled from GSTR-1 Tables 6A and 6B, so check that GSTR-1 is right before you file GSTR-3B.

Documents checklist for exporters

Frequently asked questions