When you start working with a foreign client, the invoice can raise questions that do not come up in a domestic project.
Do I charge them 18% GST? Will they even pay it? Am I breaking the law if I don't?
If you're a freelancer or agency owner in India working with foreign clients, you're probably asking the exact same questions right now.
Look, here's the good news: many qualifying exports of services can be invoiced without charging GST to the foreign client.
But there's a catch. You have to do the paperwork correctly. Let's break down exactly how to legally export your services with zero GST, without making it overly complicated.
The "Export of Services" Rule
Under Indian GST law, a service provided to someone outside India may qualify as an "export of service" if the export conditions are met.
Qualifying exports are treated as zero-rated supplies under section 16 of the IGST Act. Zero-rated treatment has its own conditions; it is not the same as a blanket 0% GST classification for every service sold to someone overseas.
But "Zero-Rated" doesn't mean "Ignore GST Completely." You still have to play by the rules.
Rule 1: Check Whether GST Registration Applies to You
Here's where many freelancers get confused. The basic GST registration threshold for service providers is generally ₹20 lakh in aggregate turnover (₹10 lakh in some special category states). Exports are counted while calculating aggregate turnover, but that does not mean every small freelancer with one foreign client should blindly assume registration is mandatory.
In practice, you should check three things before raising zero-rated export invoices:
- Whether your annual aggregate turnover has crossed the applicable threshold.
- Whether your service qualifies as "export of services" under GST rules.
- Whether you need GST registration and LUT filing for your exact facts, especially if you want to export without paying IGST upfront or claim refunds.
If you are near the threshold, working with regular foreign clients, or dealing with a high-value contract, speak to a CA before deciding. Getting a GSTIN is free on the GST portal, but registration also brings return-filing duties, so do it deliberately.
Rule 2: The Magic "LUT" (Letter of Undertaking)
This is the most critical part of this whole process.
If you are GST-registered and want to export services without paying IGST upfront, you generally file a Letter of Undertaking (LUT) on the GST portal before you send that invoice.
Filing an LUT is basically you telling the government: "Hey, I'm exporting services. I promise to bring the foreign currency into my Indian bank account within the required timeline. Please let me export without paying IGST upfront."
Follow the GST portal's LUT filing guide for the relevant financial year, declarations and acknowledgement. Do not assume that an overseas client's address alone establishes export eligibility.
How to Format Your Invoice
When you send your invoice to a client in New York or London, it needs to look slightly different than a domestic invoice you'd send to someone in Mumbai.
Here's exactly what must be on it:
- The Exact Phrase: You must print this exact sentence somewhere on your invoice:
"Supply meant for export under bond or Letter of Undertaking without payment of integrated tax."
- Your Details: Your Name/Business Name, Address, and GSTIN.
- Client Details: Their Name and Foreign Address.
- Currency: You can invoice in USD (or their local currency).
- Bank Details: Your SWIFT code and Account Number (or your Payoneer/PayPal details).
Use our free INR invoice generator for a basic invoice and totals. It does not determine export eligibility or automatically insert legal declarations, and it currently uses INR only. Confirm the currency, required fields and wording for your export invoice separately.
Getting Paid: The FIRC Requirement
When your client finally pays you, the money usually comes through a payment gateway (like Stripe, PayPal, or Payoneer) or a direct bank wire (SWIFT) to your HDFC or ICICI account.
To prove to the government that the money actually came from outside India, you need an FIRC (Foreign Inward Remittance Certificate) or a FIRA (Foreign Inward Remittance Advice).
If you use Payoneer or PayPal, they usually provide this automatically or if you ask support for it. Save these PDFs! Your CA will ask for them when filing your GST returns to prove your exports were legit.
Summary Checklist
- Check whether GST registration applies to your turnover and facts.
- If GST-registered, file an LUT for the current financial year before exporting without IGST.
- Put the mandatory "Export without payment of tax" phrase on your invoice.
- Collect the FIRC when the money hits your bank.
Invoicing foreign clients seems intimidating at first, but once your registration position, LUT status, and invoice template are clear, it becomes much easier to repeat. When in doubt, confirm the GST position with a CA before relying on a zero-rated invoice.