Beginner questions - New GST registration queries for software exports - GST

Hello Everyone,

My client intends to register for GST this month i.e July 2023

My queries

1) He provides web design services for clients abroad. 90% of his clients are abroad. So his services will be categorized as software exports?

2) For software exports it is zero GST? If so should My client pay GST first and then ask for refund? Within how many months refund will be given?

3) He is registering for GST now in July 2023 and assume he gets his registration by August 2023, any penalties to pay for this year due to late registration etc?

4) 10% of his clients are from India. So is it advisable to mix local and international clients? If so I assume GST rate will be applicable only for those 10% of clients from India? and Zero rate for 90% abroad clients?

5) Finally what is the GST slab rate applicable for software exports?

Thanks a lot

Shanthi

Hey Shanthi! Here are answers to your GST queries for software exports:

1) Is web design service to clients abroad considered software exports?

Yes. If your client provides web design services to customers located outside India, it qualifies as an export of servicesunder GST. Export of services means:

The supplier is located in India
The recipient is located outside India
The place of supply is outside India
The payment is received in convertible foreign exchange or in Indian rupees wherever permitted by RBI

Web design services to foreign clients meet these conditions, so yes, it is treated as export of services (software exports category broadly).

2) Is software export zero-rated under GST?

Yes. Export of services is a zero-rated supply under GST. This means:

The GST rate on export of services is 0%
Your client does not have to pay GST on export invoices directly
But if your client has paid GST on inputs or input services (like software licenses, internet, office expenses), he can claim refund of the input tax credit (ITC)

Refund process:

Your client can claim refund of unutilized ITC on inputs and input services used to provide export services.
Refund can be claimed by filing GST RFD-01 online after filing the relevant GST returns.
The government aims to process refunds within 60 days of filing a complete application, but actual time may vary.

3) Late GST registration penalties?

If your client’s aggregate turnover exceeds ₹20 lakh (₹10 lakh for NE & special category states) in a financial year, GST registration is mandatory.
If your client was liable to register earlier but is registering now in July/Aug 2023, there can be late fees and interest applicable for the delay.
Late fees under Section 47: ₹100 per day (₹50 CGST + ₹50 SGST), max ₹5,000.
Interest under Section 50 on delayed tax payments may also be applicable.

If the client was not previously liable (turnover below threshold), no penalty applies.

4) Mixing local and international clients — GST applicability?

Yes, your client can have both domestic and international clients.
For domestic clients (10%), GST at the applicable rate must be charged (usually 18% for software/web design).
For export clients (90%), zero-rated supply applies → no GST charged, but ITC refund possible.
You should maintain separate records for export and domestic sales for clarity and compliance.

5) GST rate slab for software exports?

Export of services including software/web design is zero-rated (0%).
Domestic supply of software/web design services attract 18% GST (9% CGST + 9% SGST) typically.

Summary: