You can still export services without an LUT. Instead of supplying under a Letter of Undertaking with no IGST, you charge and pay IGST on the export invoice and then claim a refund of that IGST, because exports of services are zero-rated under Section 16 of the IGST Act. The export is equally valid either way; the difference is cash flow and paperwork, since your tax money sits with the government until the refund arrives.
Key takeaways
- Two routes to zero-rating: export under LUT (Form GST RFD-11) without IGST, or pay IGST and claim a refund.
- The IGST-paid route is common when an LUT was not filed in time, or when a business prefers it for its own reasons.
- Your working capital takes the hit: IGST is paid when you file returns, and the refund comes later.
- The refund depends on clean documentation: invoices, returns and proof that payment arrived in convertible foreign exchange.
- The EDF does not change with the route. You still file it monthly for every foreign invoice.
LUT vs IGST paid at a glance
| Point | Export under LUT | Export with IGST paid |
|---|---|---|
| Tax on invoice | No IGST charged | IGST charged at the applicable rate |
| Invoice wording | "Supply meant for export under LUT without payment of IGST" | Shows IGST amount |
| Cash outflow | None for IGST | IGST paid with your return |
| Recovery | Not needed | Refund claim for IGST paid |
| Paperwork | Annual LUT filing on RFD-11 | Refund application and supporting documents |
| Effect on EDF | None | None |
Both routes rely on the supply meeting all five conditions for export of services in Section 2(6) of the IGST Act. If a condition fails (for example, the place of supply is in India), it is not an export, and neither route applies. Our explainer on the five Section 2(6) conditions covers each.
When businesses end up on the IGST-paid route
- The LUT was not filed for the financial year. A business that forgot to renew in April and has already invoiced may have to pay IGST on those invoices.
- The business is new to exporting and raised its first export invoice before filing the LUT.
- The CA advises it for reasons specific to the business, such as its refund position on inputs.
If you are simply behind on the LUT, the usual fix is to file it as soon as possible so future invoices can go out without IGST. Our guide to filing an LUT on RFD-11 walks through it.
The cash-flow cost, in numbers
Shoreline Analytics Pvt Ltd in Visakhapatnam forgot to file its LUT for a new financial year and raised two export invoices in April 2027 before noticing:
| Invoice | Client | Taxable value | IGST at 18% (illustrative rate) |
|---|---|---|---|
| SA/27-28/001 | Harbourview Insurance (Canada) | ₹9,60,000 | ₹1,72,800 |
| SA/27-28/002 | Kittiwake Media (UK) | ₹6,40,000 | ₹1,15,200 |
| Total | ₹16,00,000 | ₹2,88,000 |
Shoreline paid ₹2,88,000 of IGST with its April return and filed a refund claim. Until the refund arrives, that money is unavailable. For a small firm, ₹2.88 lakh tied up for several months is noticeable. Shoreline filed its LUT in May, and invoices from then on went out without IGST. Use whatever rate your CA confirms for your service; the 18% above is for illustration only.
Who pays the IGST: you or the client?
This is a practical question the law summary does not settle for you. Foreign clients do not expect to pay Indian tax, and many will refuse. In practice, exporters on the IGST-paid route usually agree the commercial price with the client and handle the IGST themselves, recovering it through the refund. How that shows on the invoice, and what the client actually pays, should be decided with your CA before you invoice.
It matters for the EDF too. Part 2B asks for the invoice amount and the net realisable value. If the invoice shows IGST that the client will not pay, agree with your bank which figure goes where, so the EDPMS entry closes at the amount actually received.
Claiming the refund: the basics
The refund of IGST paid on exports of services is claimed through an application on the GST portal; Form RFD-01 is the refund application form. Your CA will typically prepare:
| Document | Purpose |
|---|---|
| Export invoices showing IGST | Shows tax charged on the export |
| GST returns reporting the exports | Shows the tax was declared and paid |
| FIRAs, FIRCs or bank realisation evidence | Shows payment received in convertible foreign exchange (or permitted INR) |
| Statement linking invoices to receipts | Lets the officer verify each export |
| Contracts, where asked | Supports place of supply and nature of service |
Refunds stall most often because invoices, returns and remittance evidence do not line up: a wrong purpose code on a FIRA, a client name that differs between invoice and remittance, or receipts that cannot be matched to invoices. Our article on GST refunds on export of services covers common delays.
The EDF does not care which route you chose
The EDF is a FEMA declaration. It lists your foreign invoices, month by month, and the bank tracks their realisation. Whether you charged IGST or exported under LUT, Shoreline's April 2027 invoices go on the April EDF, due by 30 May 2027. Each must be realised within 9 months from its invoice date.
The EDF trail is useful for the refund, though: the same invoices, FIRAs and EDPMS closures that satisfy your bank also support the refund claim. Keep one set of records serving both.
This is general information, not legal or tax advice.
Frequently asked questions
Can I export services without an LUT?
Yes. You can pay IGST on the export invoice and claim a refund. The supply is still zero-rated if all export conditions are met; the IGST-paid route just changes cash flow and paperwork.
What happens if I forgot to file my LUT this year?
Invoices raised without a valid LUT generally need IGST paid, with a refund claimed later. File the LUT as soon as possible so future invoices can go out without IGST, and ask your CA about invoices already raised.
Do I have to charge my foreign client IGST?
Foreign clients rarely expect to pay Indian tax. Exporters on the IGST-paid route usually agree the price with the client and recover the IGST through the refund. Decide the invoice presentation with your CA.
What documents are needed for an IGST refund on services?
Typically export invoices, GST returns reporting the exports, proof of payment in convertible foreign exchange such as FIRAs, and a statement linking invoices to receipts. Your CA will confirm the exact list.
Does paying IGST change my EDF?
No. The EDF is filed the same way whichever GST route you use. Agree with your bank how invoice amount and NRV are shown if the invoice includes IGST the client does not pay.
Bottom line
Exporting without an LUT is perfectly legal; it just means paying IGST and waiting for a refund. If you landed here by forgetting to renew, file the LUT now and keep your records tight for the refund. Your EDF stays the same either way, so prepare it with the free EDF form generator and your invoices with the export invoice generator.
This guide is general information for Indian businesses, not legal or tax advice. Rules and bank processes change — confirm specifics with your AD bank or chartered accountant.