GST for Indian freelancers with foreign clients: export of services and the LUT explained

If you are an Indian freelancer working for clients in the US, UK, Australia or elsewhere, GST probably feels like something for "real businesses". It isn't. Once your turnover crosses the registration threshold, GST rules apply to you — and the good news is that work for foreign clients is usually zero-rated, which means you can export it without paying GST if you set things up correctly.

This guide explains the key concepts in plain English and links to the official CBIC and GST portal sources. It is general information, not tax advice. Rules change; confirm your position with a Chartered Accountant before you act.

Step 1: Do you need to register at all?

Under section 22 of the CGST Act, a supplier generally has to register when their aggregate turnover in a financial year exceeds ₹20 lakh (₹10 lakh in specified special category states). Aggregate turnover is calculated on an all-India basis for your PAN and includes exports.

A few practical points:

• Export turnover counts towards the threshold even though it is zero-rated.
• Some freelancers register voluntarily before they cross the threshold — for example to claim input tax credit on business purchases, or because Indian clients ask for a GSTIN.
• Registration brings obligations: periodic returns, record-keeping and correct invoicing. Don't register "just in case" without understanding the filing work involved.

Step 2: Is your work an "export of services"?

Not every payment from abroad is automatically an export. Under section 2(6) of the IGST Act, as summarised in the GST registration handbook_2025_Edition.pdf), a supply is an export of services when all five conditions are met:

1. The supplier of the service (you) is located in India.
2. The recipient of the service is located outside India.
3. The place of supply of the service is outside India.
4. Payment is received in convertible foreign exchange, or in Indian rupees where permitted by the RBI.
5. You and the recipient are not merely establishments of the same person.

Condition 3 — place of supply — is the one that trips people up. For most services the place of supply is the location of the recipient, but there are exceptions (for example, certain services related to goods or immovable property in India, or some intermediary services). Design, development, writing, SEO and marketing for a foreign business usually satisfy the conditions, but if your situation is unusual — say you're subcontracting for an Indian agency that serves a foreign client — get professional advice. In that case your client is the Indian agency, so it is a domestic supply, not an export.

Step 3: Zero-rated means two options

Exports are zero-rated supplies. A registered exporter of services can either:

• Export without paying IGST under a Letter of Undertaking (LUT), or under a bond, and claim a refund of unutilised input tax credit; or
• Pay IGST on the export and claim a refund of that IGST.

Most freelancers choose the LUT route because it avoids paying tax up front and waiting for a refund.

Step 4: File the LUT (Form GST RFD-11)

The GST portal's LUT user guide explains the process. In short:

1. Log in to the GST portal.
2. Go to Services → User Services → Furnish Letter of Undertaking (LUT).
3. Select the financial year, enter details of two independent witnesses, and tick the self-declarations.
4. Submit with DSC or EVC.

Important details from Rule 96A of the CGST Rules and the CBIC master circular on LUTs:

• The LUT must be furnished before you make the export supply.
• An LUT is valid for the whole financial year in which it is furnished, so you file a fresh one each year (many freelancers do it in early April).
• If payment for exported services is not received within the time allowed (one year, or the period permitted under FEMA, whichever is later, subject to extensions), you can become liable to pay the tax with interest.

Step 5: Invoice correctly

An export invoice should include, among other things:

• Your name, address and GSTIN.
• A consecutive invoice number and date.
• The client's name and address (outside India).
• A description of the service.
• The value, in the agreed currency.
• A statement such as "Supply meant for export under LUT without payment of IGST", with your LUT reference.

Keep the invoice consistent with the contract and the remittance — the same client name, the same amount, the same currency. Mismatches are what cause problems later.

Step 6: Keep proof of foreign currency receipt

To show condition 4 is met, keep evidence that payment was received in convertible foreign exchange. Banks issue a Foreign Inward Remittance Certificate (FIRC) or an electronic advice (sometimes called FIRA) for inward remittances, and payment services that pay out to Indian bank accounts usually provide their own statements. When you receive money, the bank or payment service will ask for a purpose code — for software work this is often P0802 (software consultancy/implementation), and for business consulting P1006 (business and management consultancy and public relations); see this list of RBI receipt purpose codes. Our guide on getting paid by international clients covers payment methods in more detail.

Step 7: Report exports in your returns

Exports under LUT are reported in your GST returns as zero-rated supplies. Your CA or accounting software will handle the format, but you need to give them complete invoices and receipt records every month or quarter.

A worked example

Priya is a freelance UI/UX designer in Indore. In FY 2025-26 she expects about ₹24 lakh in turnover: ₹18 lakh from a London start-up and two US agencies, and ₹6 lakh from Indian clients.

1. Her aggregate turnover (₹24 lakh, including exports) is above ₹20 lakh, so she registers for GST.
2. Before invoicing her first foreign client in April, she files an LUT on the GST portal for the financial year.
3. Her invoices to the London and US clients say "Supply meant for export under LUT without payment of IGST" and are raised in GBP and USD. Payments arrive in her bank account as foreign remittances with the right purpose code, and she saves the bank advices.
4. Her invoices to Indian clients include GST at the applicable rate, and those clients may claim input tax credit.
5. Each return period she hands her CA the invoice list and remittance records, and the exports are reported as zero-rated supplies.

A simple annual GST calendar for freelancers

Common mistakes

• Not filing the LUT before the first export of the year. Diary it for April.
• Treating work for an Indian agency's foreign client as an export. Your recipient is the Indian agency.
• Receiving payment in INR from an Indian intermediary when the conditions require foreign exchange.
• Letting invoices, contracts and remittances drift apart in names, amounts or dates.
• Forgetting income tax. GST zero-rating does not affect income tax on your profit. See our guide to section 44ADA presumptive taxation.

Frequently asked questions

Do I need GST registration if all my clients are outside India?

Registration generally becomes mandatory once your aggregate turnover exceeds ₹20 lakh in a financial year (₹10 lakh in special category states), and export turnover counts towards that figure. Below the threshold registration is generally optional.

What is an LUT in GST?

A Letter of Undertaking, filed in Form GST RFD-11 on the GST portal, lets a registered person export goods or services without paying IGST. It is valid for the financial year in which it is filed.

Do I charge GST to a foreign client?

If the supply qualifies as an export of services and you have a valid LUT, you invoice without GST and state that the supply is under LUT without payment of IGST.

Which purpose code should I use for freelance software work?

P0802 (software consultancy/implementation) is commonly used for software services, and P1006 for business and management consultancy. Choose the code that matches the service and ask your bank if unsure.

Does Freelancers India handle GST for me?

No. Freelancers India does not process payments or issue invoices on your behalf. You remain responsible for your own GST and income tax compliance.

Sources

• CGST Act, section 22 (CBIC)
• Handbook on Registration under GST, November 2025 edition (Telangana Commercial Taxes)_2025_Edition.pdf)
• GST portal — Furnishing of Letter of Undertaking
• CGST Rules, Rule 96A (CBIC)
• CBIC master circular on LUT and bonds (2017)
• RBI purpose codes for receipts (bank-published list)