GST/service tax when working in India

Under Indian GST law, providing services from India to clients abroad is generally considered an "export of services" and is classified as a "zero-rated supply." This means you do not charge GST on your invoices, but you retain the ability to claim a refund of the input tax credits you paid on business-related purchases.

Key Conditions to Qualify as an Export

For a service to be legally treated as an export (and thus zero-rated), the following five conditions must be met simultaneously:

1. Supplier Location: You (the supplier) must be located in India.

2. Recipient Location: The recipient of the service must be located outside India.

3. Place of Supply: The place of supply must be outside India (typically, for most services, this is the location of the recipient).

4. Payment: The payment for the services must be received in convertible foreign exchange (or in INR where permitted by the RBI).

5. Separate Entities: You and the recipient must not be merely establishments of the same person (e.g., you cannot "export" services to your own foreign branch).

Important Considerations

• Physical Performance: If you are required to travel abroad to perform the service in India (e.g., a workshop in Mumbai for a foreign client), it does not qualify as an export. In such cases, GST applies at the applicable rate (usually 18% IGST).

• Intermediary Services: If you act as an intermediary, the service generally does not qualify as an export, and GST will apply.

• Documentation: To maintain zero-rated status and claim refunds, you must maintain proper documentation:

  • Invoices: Clearly state that the supply is for export under a Letter of Undertaking (LUT) without payment of IGST.

  • LUT: You should file a Letter of Undertaking (LUT) on the GST portal for each financial year to export services without paying IGST upfront.

  • Proof: Keep records of your contracts, invoices, and foreign inward remittance certificates (FIRC/BRC) as evidence of the transaction.

• Registration Threshold: If your aggregate annual turnover is below the GST registration threshold (typically ₹20 lakhs for service providers, or ₹10 lakhs in special category states), registration is generally not mandatory, though many exporters register to claim input tax credit refunds.

Summary: You generally do not need to pay or charge GST for services provided to foreign clients from India, provided you meet the criteria for an "export of services" and maintain proper documentation (such as filing an LUT). If you do not meet all criteria—specifically if the service is performed within India—GST will be applicable.