Is GST charged on exports?

Exports are zero-rated supplies. You can either export without paying IGST by furnishing a Letter of Undertaking (LUT), or export on payment of IGST and claim a refund of the tax paid. Either way, the effective GST on the export is nil.

What is an LUT in GST?

A Letter of Undertaking (LUT) is a declaration filed on the GST portal (Form GST RFD-11) by which an exporter undertakes to export without paying IGST. It is valid for one financial year and must be renewed annually. It lets you avoid blocking working capital in tax refunds.

What should an export invoice contain?

Besides the normal invoice fields, an export invoice must carry an endorsement such as 'Supply meant for export under LUT without payment of IGST' (or 'on payment of IGST'), the recipient's details and country, the currency, conversion rate, and details like port code and shipping bill where applicable.

Can I raise an export invoice in foreign currency?

Yes. Export invoices are commonly raised in foreign currency. For GST records you also show the value in INR using the applicable exchange rate, so the taxable value can be reported correctly.

Export Invoice Under GST With LUT (Zero-Rated Supply)

Exporting goods or services is treated favourably under GST — exports are zero-rated, meaning no tax ultimately sticks to them. But you still have to invoice correctly, and you must choose how you export: under an LUT without paying tax, or with payment and a refund.

What “zero-rated” means

A zero-rated supply is one on which the effective GST is nil, while still allowing the exporter to claim input tax credit on inputs. Zero-rated supplies include:

Export of goods or services
Supplies to a Special Economic Zone (SEZ) unit or developer

This is different from an exempt supply — exempt supplies don’t allow ITC, whereas zero-rated exports do. That distinction is what makes exports genuinely tax-free through the chain.

Two ways to export

You have a choice:

Route	What you do	Cash flow
With LUT	Export without paying IGST after filing an LUT	Best — no tax blocked
With payment	Pay IGST on the export, then claim a refund	Tax blocked until refund

Most exporters prefer the LUT route because it avoids paying IGST upfront and waiting for a refund. The LUT (Form GST RFD-11) is filed online, is valid for one financial year, and must be renewed each year.

Exporting under an LUT

Once your LUT is filed and accepted:

You export without charging IGST on the invoice.
Your invoice carries the endorsement: “Supply meant for export under LUT without payment of Integrated Tax.”
You still claim ITC on your inputs, and can seek a refund of unutilised ITC if it accumulates.

Exporting with payment of IGST

If you don’t have an LUT, you:

Charge IGST on the export invoice at the applicable rate.
Endorse it: “Supply meant for export on payment of Integrated Tax.”
Claim a refund of the IGST paid (for goods, the shipping bill often doubles as the refund application).

What an export invoice must contain

In addition to the usual tax-invoice fields, an export invoice needs:

The endorsement (LUT / with payment) as above
Recipient’s name, address and country of destination
Currency of the invoice and the INR value (with conversion rate)
Number and date of the application for removal of goods for export (ARE-1) where applicable
For goods: port code, shipping bill number/date (added later if not available at invoicing)
Place of supply as the location outside India / SEZ

Export of services — the conditions

For a service to qualify as an export of service, broadly all of these must hold:

The supplier is in India and the recipient is outside India
The place of supply is outside India
Payment is received in convertible foreign exchange (or INR where permitted by RBI)
The supplier and recipient are not merely establishments of the same person

If any condition fails, the transaction may not be a valid export, so confirm your position before treating it as zero-rated.

A quick example (services, under LUT)

A software firm (LUT filed) invoices a US client USD 5,000:

Endorsement: “Supply meant for export under LUT without payment of IGST”
Invoice in USD 5,000, with the INR equivalent shown using the applicable rate
No IGST charged
The firm claims ITC on its inputs and can seek a refund of accumulated ITC

The bottom line

Exports are zero-rated: raise the invoice without IGST under an LUT (the working-capital-friendly route), or with IGST and claim a refund. Always add the correct endorsement, show the currency and INR value, and — for services — confirm all the export conditions are met.

Create export invoices with the right endorsements and currency handling, free, with the RaiseBill Bill Maker.

This guide is for general information only and is not legal or tax advice. GST law changes frequently — consult a qualified Chartered Accountant for advice specific to your business.