{"id":2698,"date":"2026-10-28T16:00:00","date_gmt":"2026-10-28T10:30:00","guid":{"rendered":"https:\/\/blog.remitcircle.com\/?p=2698"},"modified":"2026-10-28T16:03:13","modified_gmt":"2026-10-28T10:33:13","slug":"lut-for-export-of-services-how-sole-proprietors-and-opcs-invoice-overseas-clients-without-18-igst","status":"publish","type":"post","link":"https:\/\/blog.remitcircle.com\/education\/lut-for-export-of-services-how-sole-proprietors-and-opcs-invoice-overseas-clients-without-18-igst\/","title":{"rendered":"LUT for export of services: how sole proprietors and OPCs invoice overseas clients without 18% IGST"},"content":{"rendered":"\t\t
\n\t\t\t\t
\n\t\t\t\t\t
\n\t\t\t\t
\n\t\t\t\t\t\t\t\t\t

The answer<\/b><\/h2>\n

Exports of services are zero-rated under Section 16 of the IGST Act. File a Letter of Undertaking on Form GST RFD-11 once each financial year, invoice your foreign client without IGST, and receive payment in convertible foreign exchange within the FEMA realization window. Your FIRA or FIRC is the proof the payment came in. The e-BRC is a separate DGFT document, needed mainly for DGFT-side claims.<\/span><\/p>\n

\u00a0<\/p>\n

Key takeaways<\/b><\/h2>\n
    \n
  • LUT means invoice at 0% IGST with no cash blocked. Without one, you pay 18% IGST upfront and claim it back as a refund later.<\/span><\/li>\n
  • It is free, online, and valid for one financial year (April to March). Renew every year, ideally before your first export invoice.<\/span><\/li>\n
  • \u00a0F<\/span>ive conditions make it an export (Section 2(6) IGST Act). Miss one, especially payment in convertible foreign exchange, and it can be treated as a domestic supply.<\/span><\/li>\n
  • Under an LUT, if payment is not realised within the FEMA window from the invoice date, the IGST becomes payable with interest.<\/span><\/li>\n
  • FIRA and FIRC prove the money arrived. The e-BRC ties it to a specific export on DGFT. Most solo service exporters work day to day with FIRA or FIRC.<\/span><\/li>\n
  • Sole prop vs OPC changes the paperwork, not the rule. Both can file an LUT.<\/span><\/li>\n<\/ul>\n

    \u00a0<\/p>\n

    What an LUT actually is<\/b><\/h2>\n

    In plain terms, an LUT is an annual promise to the GST department: “I will export these services without charging IGST, and if I do not meet the export conditions, I will pay the tax with interest.” It comes from Rule 96A of the CGST Rules.<\/span><\/p>\n

    It is not an exemption and it is not a loophole. The export is genuinely taxed at 0%; the LUT just removes the step where you pay 18% first and wait for a refund. Any GST-registered exporter can file one, except someone prosecuted for tax evasion above \u20b92.5 crore under GST or the earlier laws. For a solo consultant, freelancer, or small firm this will almost never apply. The alternative for those who cannot file an LUT is a bond backed by a bank guarantee.<\/span><\/p>\n

    \u00a0<\/p>\n

    First, do you even need GST registration?<\/b><\/h3>\n

    An LUT needs a GSTIN, so this comes first. Service exporters below the \u20b920 lakh aggregate turnover threshold are generally not required to register, under Notification No. 10\/2017 (Integrated Tax). Two situations push many small exporters to register anyway:<\/span><\/p>\n

      \n
    • You want to claim input tax credit on business expenses, or use the LUT route for clean export documentation.<\/span><\/li>\n
    • Reverse-charge GST on imported services. Paying for foreign software subscriptions used for your business (design tools, cloud compute, video conferencing) can create a GST liability under reverse charge, which can trigger mandatory registration regardless of turnover. Ask your CA whether this applies to you.<\/span><\/li>\n<\/ul>\n

      So “under \u20b920 lakh means no GST” is not a safe blanket rule. Check your own situation.<\/span><\/p>\n

      \u00a0<\/p>\n

      The 5 conditions that make it an export of services<\/b><\/h2>\n

      Section 2(6) of the IGST Act says a service counts as an export only if all five hold:<\/span><\/p>\n

        \n
      • You, the supplier, are located in India.<\/span><\/li>\n
      • Your client is located outside India.<\/span><\/li>\n
      • The place of supply is outside India. For most remote professional services to a foreign business, it is. Some service categories have special place-of-supply rules.<\/span><\/li>\n
      • You receive payment in convertible foreign exchange, or in Indian rupees where the RBI permits it.<\/span><\/li>\n
      • You and your client are not merely establishments of the same person; billing your own foreign branch does not count.<\/span><\/li>\n<\/ul>\n

        Condition four is where FIRA and FIRC come in. They are how you show it was met.<\/span><\/p>\n

        \u00a0<\/p>\n

        Sole proprietor vs OPC: what changes<\/b><\/h2>\n

        The GST rule is identical. The paperwork differs.<\/span><\/p>\n\n\n\n\n\n\n\n\n
        \n

        Requirement<\/b><\/p>\n<\/td>\n

        		\n

        Sole proprietorship<\/b><\/p>\n<\/td>\n

        		\n

        One Person Company (OPC)<\/b><\/p>\n<\/td>\n<\/tr>\n

        \n

        Whose GSTIN<\/span><\/p>\n<\/td>\n

        		\n

        Linked to the proprietor’s personal PAN<\/span><\/p>\n<\/td>\n

        		\n

        Linked to the company’s own PAN<\/span><\/p>\n<\/td>\n<\/tr>\n

        \n

        Who signs the LUT<\/span><\/p>\n<\/td>\n

        		\n

        The proprietor<\/span><\/p>\n<\/td>\n

        		\n

        The director or authorised signatory<\/span><\/p>\n<\/td>\n<\/tr>\n

        \n

        Signing method<\/span><\/p>\n<\/td>\n

        		\n

        EVC (OTP) or DSC<\/span><\/p>\n<\/td>\n

        		\n

        Companies generally need a DSC; confirm on the portal<\/span><\/p>\n<\/td>\n<\/tr>\n

        \n

        Whose account the client pays<\/span><\/p>\n<\/td>\n

        		\n

        The business account in the proprietor’s name<\/span><\/p>\n<\/td>\n

        		\n

        The company’s account, never the director’s personal account<\/span><\/p>\n<\/td>\n<\/tr>\n

        \n

        IEC (needed for e-BRC)<\/span><\/p>\n<\/td>\n

        		\n

        PAN-based, in the proprietor’s name<\/span><\/p>\n<\/td>\n

        		\n

        PAN-based, in the company’s name<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

        The last two rows cause real trouble for OPC owners. If a client pays a personal account for an invoice raised by the company, the payment proof does not match the invoicing entity, which can put the zero-rating at risk.<\/span><\/p>\n

        \u00a0<\/p>\n

        The process, in numbered steps<\/b><\/h2>\n

        What the Indian exporter does<\/b><\/h3>\n
          \n
        1. Confirm GST registration. If registered, note the GSTIN. If not, decide with a CA whether to register (see the \u20b920 lakh section above).<\/span><\/li>\n
        2. Log in at gst.gov.in and go to Services \u2192 User Services \u2192 Furnish Letter of Undertaking (LUT). Select the financial year being filed for.<\/span><\/li>\n
        3. Tick the declarations (that you will export within the time allowed, follow GST rules, and pay tax with interest if you do not). Add two independent witnesses: name, address, occupation.<\/span><\/li>\n
        4. Sign and submit with EVC or DSC. The acknowledgement generates an ARN (Application Reference Number). Save it; that ARN is the proof the LUT is accepted.<\/span><\/li>\n
        5. On every export invoice: no IGST, and add the endorsement “Supply meant for export under Letter of Undertaking without payment of integrated tax.” Report these invoices as exports without payment of tax in GSTR-1.<\/span><\/li>\n
        6. Track realisation. Each invoice must be paid within the FEMA window prescribed by RBI, measured from the invoice date. If payment slips past that window, the IGST becomes payable with 18% annual interest from the invoice date.<\/span><\/li>\n
        7. Renew the LUT at the start of each new financial year, before the first export invoice.<\/span><\/li>\n<\/ol>\n

          \u00a0<\/p>\n

          What the overseas client does<\/b><\/h3>\n
            \n
          1. Receives the invoice without IGST and pays the face value in a freely convertible currency, or in INR through an RBI-permitted channel.<\/span><\/li>\n
          2. Includes the invoice number in the remittance memo so the exporter’s bank or platform can tag the payment to the right invoice, purpose code and FIRA.<\/span><\/li>\n
          3. Is not required to file any Indian form or handle GST or LUT paperwork. The compliance sits entirely on the Indian side.<\/span><\/li>\n<\/ol>\n

            \u00a0<\/p>\n

            Documents to keep, with the purpose code<\/b><\/h2>\n

            For every export invoice, hold the following on file. The GST officer, your CA, or your AD bank may ask for them at refund, assessment or FEMA reconciliation.<\/span><\/p>\n