Do Exporters of Services Need GST Registration?

A person who only exports services is not required to register for GST while aggregate turnover stays within ₹20 lakh. Notification No. 10/2017-Integrated Tax dated 13 October 2017 exempts persons making inter-State supplies of taxable services from obtaining registration, and the limit is ₹10 lakh in Manipur, Mizoram, Nagaland and Tripura. The exemption is needed because section 7(5)(a) of the IGST Act treats a supply as inter-State whenever the supplier is in India and the place of supply is outside India, and section 24(i) of the CGST Act would then require registration from the first supply. Section 23(2) of the CGST Act overrides both section 22(1) and section 24, which is what allows the notification to displace section 24(i).

If you act as an agent, broker or intermediary between your overseas client and third parties. From 30 March 2026 the place of supply is your recipient's location, so section 2(6)(iii) can be satisfied and you may fall in branch A, B or C rather than automatically in branch D. Whether the supply is an export then turns on conditions (ii) and (v). Before 30 March 2026 the place of supply was your own location and the supply was not an export. Statutory basis: section 13(8)(b), IGST Act, omitted by section 157 of the Finance Act, 2026 (No. 4 of 2026), with effect from 30.03.2026; section 13(2), IGST Act, and its proviso; section 2(6)(iii) and (v), IGST Act; Explanation 1 and Explanation 2 to section 8, IGST Act. The agent, broker and intermediary section below sets this out.

No branch is changed by a Letter of Undertaking, because an LUT cannot be furnished by an unregistered person. Rule 96A(1) of the CGST Rules opens with "any registered person availing the option to supply goods or services for export without payment of integrated tax", and section 16(3) of the IGST Act gives the refund of unutilised input tax credit to "a registered person". An exporter in branch A, B or D who wants either must first register voluntarily under section 25(3) of the CGST Act, which is the ordinary registration route.

The exemption does not reach inter-State suppliers of goods, who are liable under section 24(i) from the first supply. Nor does it survive the ₹20 lakh ceiling, because once aggregate turnover crosses that figure the exemption stops and section 22(1) applies.

Section 2(6) of the IGST Act sets five conditions and all five must be met together. The supplier of service must be located in India; the recipient of service must be located outside India; the place of supply of service must be outside India; the payment must have been received by the supplier in convertible foreign exchange or in Indian rupees wherever permitted by the Reserve Bank of India; and the supplier and the recipient must not be merely establishments of a distinct person in accordance with Explanation 1 in section 8. A supply that fails any one of the five is not an export of services, is not zero-rated, and carries GST in the ordinary way.

Condition (iv) reads in full: "the payment for such service has been received by the supplier of service in convertible foreign exchange or in Indian rupees wherever permitted by the Reserve Bank of India; and". The Indian-rupees alternative was inserted by section 2 of the Integrated Goods and Services Tax (Amendment) Act, 2018 (Act No. 32 of 2018), with effect from 1 February 2019.

Condition (v) is the one that catches groups. Explanation 1 to section 8 of the IGST Act treats an establishment of a person in India and another establishment of the same person outside India as establishments of distinct persons, and Explanation 2 treats a branch, agency or representational office as an establishment in that territory. So an Indian branch of a foreign company billing that foreign company is not exporting, and an Indian company billing its own overseas branch is not exporting. Explanation 1(iii) reads, in its current form, "an establishment in a State or Union territory and any other establishment registered within that State or Union territory", the words "being a business vertical" having been dropped by section 4 of the IGST (Amendment) Act, 2018 with effect from 1 February 2019.

Circular No. 161/17/2021-GST dated 20 September 2021 takes the view, at paragraphs 5.1 and 5.2, that a company incorporated in India and a body corporate incorporated outside India are separate persons under the CGST Act and therefore separate legal entities, so supplies by an Indian subsidiary, sister concern or group concern to the foreign company are not caught by condition (v). That circular is relied on here for its interpretive view alone: its own reproduction of section 2(6)(iv) and of Explanation 1(iii) predates the 1 February 2019 amendments and is not the source of any statutory text on this page.

Export of a service is an inter-State supply because section 7(5)(a) of the IGST Act says so. Section 7(5) provides that a supply of goods or services or both, "when the supplier is located in India and the place of supply is outside India", shall be treated to be a supply in the course of inter-State trade or commerce. No State line has to be crossed. That classification matters for one reason: section 24(i) of the CGST Act requires "persons making any inter-State taxable supply" to be registered notwithstanding the section 22(1) threshold. Without a specific exemption, every freelancer with a single foreign client would be liable to register on the first invoice. Notification No. 10/2017-Integrated Tax is that exemption.

Section 23(2) of the CGST Act was substituted by section 140 of the Finance Act, 2023 with retrospective effect from 1 July 2017 and now reads: "Notwithstanding anything to the contrary contained in sub-section (1) of section 22 or section 24, the Government may, on the recommendations of the Council, by notification, subject to such conditions and restrictions as may be specified therein, specify the category of persons who may be exempted from obtaining registration under this Act." A notification issued under section 23(2) therefore displaces section 24(i) expressly, and has done so from the beginning of GST. The exemption covers services only, so a person crossing a State line with goods has no equivalent relief. Sections 22, 23 and 24 are three of the provisions indexed in the GST registration rules.

Section 7(5)(a) never uses the word "export". It is purely location-based, and the export characterisation comes from section 2(6) while the zero-rating comes from section 16(1)(a).

The rule that kept intermediaries out of export has been deleted.

Section 13(8)(b) of the IGST Act used to fix the place of supply of intermediary services at the location of the supplier. If you were in India, your place of supply was in India, and condition (iii) of the export test in section 2(6) could never be met. It did not matter that your client was in Frankfurt and paid you in euros.

That clause was omitted by section 157 of the Finance Act, 2026 (No. 4 of 2026), which received the President's assent on 30 March 2026 and carried no separate commencement date. Section 13(8) now reads clause (a), covering banking, financial institution and NBFC services to account holders, and then clause (c), covering the hiring of means of transport for up to a month. There is no clause (b).

With the special rule gone, intermediary services fall to the residual rule in section 13(2): the place of supply is the location of the recipient of services. If your recipient is outside India, the place of supply is outside India, and condition (iii) of section 2(6) is satisfied.

That is one condition of five, and the other four have not moved. You still need to be located in India (i), your recipient must actually be located outside India (ii), you must be paid in convertible foreign exchange or in Indian rupees where the RBI permits (iv), and you and your recipient must not be merely establishments of a distinct person under Explanation 1 to section 8 (v). Clear all five and the supply is an export of services, zero-rated under section 16(1)(a), with the LUT route in section 16(3) available.

Three cautions follow.

First, the proviso to section 13(2). If the location of your recipient is not available in the ordinary course of business, the place of supply reverts to your location, and you are back where you started. A named, contracted, invoiced overseas client is not a problem. An anonymous counterparty may be.

Second, condition (v) is where captive arrangements fail. If your Indian entity is the branch, agency or representational office of the overseas recipient, Explanation 2 to section 8 makes it an establishment in India and the supply is not an export. Separately incorporated group companies are a different case.

Third, and most often missed: the change is prospective. It applies to supplies made on or after 30 March 2026. For anything before that date, section 13(8)(b) was on the statute book and governed. The Bombay High Court held it constitutionally valid on 6 June 2023, confined to the IGST Act. Departmental proceedings for earlier periods are not extinguished by the deletion, and the omission is not a ground for reopening a period that has closed against you.

Section 2(13), which defines an intermediary, is unchanged. What has changed is that under section 13 it no longer decides your place of supply. Whether your particular arrangement is an export turns on conditions (ii) and (v) of section 2(6), which is to say who the recipient really is, and how you are related to them. Those are questions about your contracts, and they are worth putting to your adviser before you file an LUT.

Notification No. 10/2017-Integrated Tax is in force as at 24 August 2026 and has been amended once. It was issued on 13 October 2017 under section 20 of the IGST Act read with section 23(2) of the CGST Act, and it exempts "persons making inter-State supplies of taxable services and having an aggregate turnover, to be computed on all India basis, not exceeding an amount of twenty lakh rupees in a financial year". Its proviso reduces that figure to ₹10 lakh for special category States. Notification No. 03/2019-Integrated Tax dated 29 January 2019 substituted the wording of that proviso with effect from 1 February 2019, so the ₹10 lakh figure now tracks the first proviso to section 22(1) of the CGST Act read with clause (iii) of the Explanation to that section.

The 2019 amendment changed the State list without changing the figure. Before 1 February 2019 the ₹10 lakh figure referred to the eleven States in article 279A(4)(g) of the Constitution other than Jammu and Kashmir. From 1 February 2019 it refers to the special category States as section 22 defines them: Manipur, Mizoram, Nagaland and Tripura. For goods the figure in those four States is likewise ₹10 lakh, against ₹20 lakh generally, and the ₹10 lakh figure for services in the same four States is confirmed by Notification No. 03/2019-Integrated Tax. The GST registration threshold limit sets out the whole statutory chain behind both figures.

The plain Integrated Tax series is complete at 37 entries and closes at Notification No. 01/2024-Integrated Tax dated 10 July 2024, so nothing after 2019 amends, supersedes or rescinds Notification No. 10/2017-Integrated Tax.

Exports count towards aggregate turnover in full. Section 2(6) of the CGST Act defines aggregate turnover as the aggregate value of all taxable supplies, exempt supplies, exports of goods or services or both and inter-State supplies of persons having the same Permanent Account Number, computed on an all-India basis. Zero-rating does not remove a supply from the count. It removes the tax, not the turnover. So a consultant with ₹14 lakh of Indian fees and ₹9 lakh of exported services has ₹23 lakh of aggregate turnover and is liable to register, even though every rupee of the export is zero-rated and no GST is payable on it.

Crossing the threshold on export receipts alone puts the exporter into registration and into monthly return filing without generating a single rupee of output tax.

A zero-rated supply carries input tax credit; an exempt supply does not. Section 16(1)(a) of the IGST Act makes export of goods or services or both a zero-rated supply. Section 16(2) then provides that, subject to section 17(5) of the CGST Act, "credit of input tax may be availed for making zero-rated supplies, notwithstanding that such supply may be an exempt supply". That single sentence is the whole commercial value of zero rating: GST paid on laptops, software subscriptions, co-working rent and professional fees stays recoverable even though the exporter charges no GST on the invoice. An exempt supply blocks that credit. Zero-rated is also not a 0% rate slab. It is a status conferred by section 16, not a rate in a tariff notification.

Section 16(1) of the IGST Act has a second limb: supply of goods or services or both for authorised operations to a Special Economic Zone developer or unit is also zero-rated under section 16(1). The words "for authorised operations" were inserted by section 123(a) of the Finance Act, 2021 and brought into force on 1 October 2023 by Notification No. 27/2023-Central Tax.

A registered service exporter has two routes and both are open to services. Under section 16(3) of the IGST Act the exporter supplies without payment of integrated tax under a bond or Letter of Undertaking and claims a refund of unutilised input tax credit under section 54 of the CGST Act. Under section 16(4) the exporter pays integrated tax on the export and claims a refund of the tax so paid, but only for a class of goods or services notified by the Government. Notification No. 01/2023-Integrated Tax dated 31 July 2023, in force from 1 October 2023 and as substituted by Notification No. 05/2023-Integrated Tax dated 26 October 2023, notifies all goods or services except a listed table of goods. Every service is inside that notification, so the pay-and-refund route stays available to service exporters.

The LUT route is the default for a services business.

The proviso to section 16(3), which requires a refund to be repaid with interest if sale proceeds are not realised, applies to zero-rated supply of goods only. For services the parallel discipline is rule 96A(1)(b), set out in the next section.

Every registered person intending to export without payment of integrated tax may furnish a Letter of Undertaking, with one exclusion. Notification No. 37/2017-Central Tax dated 4 October 2017 makes all such registered persons eligible "except those who have been prosecuted for any offence under the Central Goods and Services Tax Act, 2017 or the Integrated Goods and Services Tax Act, 2017 or any of the existing laws in force in a case where the amount of tax evaded exceeds two hundred and fifty lakh rupees". A person inside that exclusion must furnish a bond instead. The same notification requires the Letter of Undertaking to be furnished "for a financial year", and Circular No. 8/8/2017-GST dated 4 October 2017 states that the LUT is valid for the whole financial year in which it is tendered. It is therefore filed again each year.

Rule 96A(1) requires the LUT to be furnished prior to export, and binds the exporter to pay the tax with interest under section 50(1) within fifteen days after the expiry of one year, or the period as allowed under the Foreign Exchange Management Act, 1999 including any extension permitted by the Reserve Bank of India, whichever is later, from the date of issue of the export invoice, if payment is not received in convertible foreign exchange or in Indian rupees where permitted by the RBI. Clause (b) was substituted in this form by Notification No. 12/2024-Central Tax dated 10 July 2024. Rule 96A(3) then provides that on failure to pay, the export under LUT "shall be withdrawn forthwith" and the amount recovered under section 79, and rule 96A(4) restores the facility once the amount is paid.

Can you file an LUT without a GSTIN?

A Letter of Undertaking cannot be filed without GST registration. Rule 96A(1) confers the option on "any registered person", FORM GST RFD-11 is filed on the GST portal against a GSTIN, and section 16(3) of the IGST Act gives the refund of unutilised input tax credit to "a registered person". An exporter below ₹20 lakh who wants either the LUT or the refund therefore has to register voluntarily under section 25(3) of the CGST Act, and from that point carries the full return-filing obligation of a registered person. That is a real trade: recoverable input tax credit against monthly compliance. For a services business with low input GST, the trade is often not worth making.

Registration converts the GST on laptops, software and rent from a sunk cost into recoverable credit, at the price of a filled compliance calendar. GST registration for individuals sets out what the obligation looks like month to month.

A refund claim on export of services must be supported by bank realisation evidence. Rule 89(2)(c) of the CGST Rules requires the refund application in FORM GST RFD-01 to be accompanied by "a statement containing the number and date of invoices and the relevant Bank Realisation Certificates or Foreign Inward Remittance Certificates, as the case may be, in a case where the refund is on account of the export of services". Condition (iv) of section 2(6) of the IGST Act is satisfied by receipt in convertible foreign exchange, or in Indian rupees wherever the Reserve Bank of India permits it. Circular No. 202/14/2023-GST dated 27 October 2023 clarifies that export proceeds received in Indian rupees from a Special Rupee Vostro Account maintained under the RBI's arrangement satisfy that condition.

The evidence a refund needs is the Foreign Inward Remittance Certificate or Bank Realisation Certificate named in rule 89(2)(c), issued by the bank that receives the remittance. The rupee route is not a loophole: Circular No. 202/14/2023-GST ties it to the RBI's Special Rupee Vostro arrangement and to the conditions in the Foreign Trade Policy, and to nothing else. And whether a payout from a payment platform produces documentation that satisfies rule 89(2)(c) depends on whether the exporter's authorised dealer bank issues an FIRC or its equivalent against that inward remittance, which has to be confirmed with the bank.