Landing an international client is a huge milestone for any Indian freelancer! But when it's time to send the invoice, confusion strikes: Do I charge 18% GST to someone in the US or UK?
The short answer is: often no, if the service qualifies as an export of services. But you still need to follow the correct GST process for your facts.
Export of Services = Zero-Rated Supply
Under Indian GST law, qualifying exports of services are treated as "zero-rated supplies." This is why many Indian freelancers can invoice foreign clients without adding 18% GST.
However, zero-rated does not mean paperwork-free. Check whether GST registration applies to you based on aggregate turnover, state threshold, refund needs, and your exact export facts. If you are GST-registered and want to export without paying IGST upfront, you generally file a Letter of Undertaking (LUT).
How to Invoice With an LUT
Once you have your LUT (filed online via the GST portal for the current financial year), your invoice should include wording similar to:
"Supply meant for export under Letter of Undertaking without payment of IGST."
Key Elements of an Export Invoice:
- Currency: You can bill in USD, EUR, or GBP.
- LUT Details: Mention your LUT details and the financial year, if applicable.
- Client Address: Their complete international address.
- Your GSTIN: Include it if you are GST-registered.
- Tax: Show IGST as 0%.
Receiving Payments (FIRC)
When your foreign payment hits your Indian bank account, it is converted to INR. You must ask your bank or payment gateway (like Stripe or PayPal) for a Foreign Inward Remittance Certificate (FIRC) or FIRA. This document proves to the government that foreign exchange actually entered the country, validating your export status.
👉 Create your export invoice today!
Use our Free Invoice Generator to quickly draft a professional invoice for your international clients.
Quick FAQs
1. What happens if I don't file an LUT?
If you are GST-registered and export without an LUT, you may have to export on payment of IGST first and then claim a refund, depending on your facts and current procedure. Confirm this with a CA before raising high-value export invoices.
2. Can I use PayPal for foreign clients?
Yes, PayPal handles the currency conversion and provides the necessary FIRA documentation. However, be extremely careful. The biggest mistake Indian freelancers make when billing US or UK clients is failing to account for the total cost of international money transfers. Platforms like PayPal quietly eat away 3% to 8% of your hard-earned revenue through high conversion markups and fixed fees. Consider asking your clients to use platforms like Wise or Payoneer, which often offer much better mid-market exchange rates.
Disclaimer
This article provides general information. Consult your CA to confirm whether GST registration, export conditions, LUT filing, and refund procedures apply to your situation.