If you are an Indian freelancer with clients abroad, GST is the law most likely to catch you by surprise. Not because you owe tax on those payments. In most cases you do not. But because the paperwork that gets you to 0% has steps, and skipping them turns a zero-rated export into a taxable supply.
Here is the short version. Services to a foreign client are an export. Exports are zero-rated under GST. To bill them at 0% you register once your turnover crosses ₹20 lakh, file a Letter of Undertaking each year, and keep the FIRA that proves the money came from abroad.
Let me walk through each step.
Do freelancers need GST registration for foreign clients?
Not until your aggregate turnover crosses ₹20 lakh in a financial year. Below that, you can invoice foreign clients without a GSTIN.
There is a common confusion here. Export of services counts as an inter-state supply, and inter-state suppliers are normally required to register regardless of turnover. But services were specifically exempted from that rule, so a freelancer exporting services under ₹20 lakh does not have to register. Once you cross ₹20 lakh, registration is mandatory within 30 days.
Aggregate turnover means all your supplies, Indian and foreign, taxable and exempt, added together. A freelancer with ₹15 lakh from US clients and ₹8 lakh from Indian clients is at ₹23 lakh and must register.
Many freelancers register voluntarily before the threshold, because a GSTIN makes it possible to claim refunds of the GST you pay on your own expenses (laptop, software subscriptions, coworking). Whether that is worth the monthly filing is a call for your CA.
What makes a service an export under GST?
Section 2(6) of the IGST Act sets five conditions. All five must be met.
- You, the supplier, are in India.
- The recipient is outside India.
- The place of supply is outside India.
- Payment is received in convertible foreign exchange, or in INR where the RBI permits.
- You and the recipient are not merely two establishments of the same person.
For a freelancer invoicing a US company for software development, all five are normally satisfied. The one that trips people is number four. The money has to be received in foreign currency through a channel that documents it. That is what the FIRA proves.
What does zero-rated mean?
Zero-rated is different from exempt. An exempt supply is outside GST entirely, and you cannot claim back the GST you paid on inputs. A zero-rated supply is inside GST at a rate of 0%, and you can claim back your input GST.
Section 16 of the IGST Act gives you two ways to export at zero rate.
- Export under LUT without paying IGST: you file a Letter of Undertaking, invoice at 0%, and claim a refund of any unused input tax credit. This is what almost every freelancer uses.
- Pay IGST and claim it back: you charge 18% IGST on the export invoice, pay it, then apply for a refund. Cash goes out and comes back weeks later. Rarely worth it for a freelancer.
What is an LUT and how do you file one?
A Letter of Undertaking is a declaration to the GST department that you will export services without paying IGST and will bring in the payment within the required time. It is Form GST RFD-11.
How to file
Log in to the GST portal, go to Services, User Services, Furnish Letter of Undertaking. Select the financial year, tick the declarations, add two witnesses, sign with DSC or EVC. It is accepted immediately and you get an ARN.
Validity
One financial year. File a fresh one every April before your first export invoice of the year. Invoicing at 0% without a valid LUT on file means IGST is technically payable on those invoices.
Who can file
Any registered person, unless they have been prosecuted for tax evasion above ₹2.5 crore. For a freelancer that is everyone.
The one condition that matters
Under Rule 96A, payment for a service exported under LUT must be received within one year of the invoice date. If it is not, IGST becomes payable on that invoice with interest from the invoice date. A client who pays fourteen months late has created a GST problem for you, not just a cash-flow one.
How to invoice a foreign client under LUT
Your export invoice needs everything a normal GST invoice has, plus a few things.
- Your GSTIN and the LUT reference number
- The line "Supply meant for export under LUT without payment of IGST"
- The client's name, address and country
- The SAC code for your service
- The invoice value in the foreign currency and, for your own records, the INR equivalent
- 0% tax with the tax column showing nil
Report it in GSTR-1 under Table 6A (exports) and in GSTR-3B under Table 3.1(b) (zero-rated supplies). Both monthly, or quarterly if you are on QRMP.
Why FIRA is the evidence
Every part of the GST export story rests on one fact. The payment came from outside India in foreign currency. The document that proves it is the FIRA.
Consider this scenario: two freelancers each file for a refund of ₹40,000 in input tax credit against their exports.
Freelancer A attaches invoices, the LUT, GSTR-1 extracts and a FIRA for every export invoice. The officer can match each invoice to a certified foreign credit. The refund is processed.
Freelancer B has invoices and bank statements, but the credits came through a route that never issued a FIRA. The officer cannot verify that the payments were foreign currency receipts. The claim is queried, and Freelancer B spends two months trying to get retrospective certification from the bank.
Rule 89(2) of the CGST Rules specifically lists the bank realisation certificate or FIRC as a document for services export refunds. Without it, there is no evidence, and without evidence there is no zero-rating in practice.
We have a complete guide on what FIRA is and how to get it here.
Common mistakes with GST on exports
- Invoicing at 0% without a live LUT: set a calendar reminder for 1 April.
- Ignoring aggregate turnover: Indian client income counts toward the ₹20 lakh threshold even if all your exports are zero-rated.
- Receiving payment in a way that does not generate FIRA: the export conditions are not met if you cannot prove foreign exchange receipt.
- Being on the composition scheme: composition dealers cannot make inter-state supplies, which includes exports. If you export, you are on the regular scheme.
- Mismatched turnover between GST returns and ITR: the GST turnover you report and the gross receipts in your income tax return are compared. They should tell the same story.
Key takeaway
Register once you cross ₹20 lakh. File an LUT every April. Invoice at 0% with the LUT reference. Collect the payment in foreign currency within a year. Keep the FIRA. That is the whole system, and each piece depends on the one before it.
Your CA handles the filings. Your job is making sure the payment channel produces the FIRA that makes the filings defensible.
How DashX supports your GST exports
DashX operates through RBI-authorised AD Category I banks (JP Morgan and HDFC) and PA-CB licensed partners. For every payment your foreign client makes, whether by bank transfer or in USDC or USDT:
- The funds settle into your own Indian bank account as a foreign inward remittance
- FIRA is issued through the AD bank, giving you the realisation evidence Rule 89 asks for
- The correct RBI purpose code is assigned, so the FIRA describes the same service your export invoice does
- The invoice generator lets you create export invoices with the client, currency and service details in one place
DashX doesn't give tax advice. Registration, LUT and refund filings are for you and your CA. We make sure the documentation is there when you need it.
Get FIRA-backed international payments. Sign up for DashX.
For the remittance document and payment classification, see our FIRA guide and RBI purpose code guide.
