Question 1

What is LUT and why is it required for exporting services?

Accepted Answer

Letter of Undertaking (LUT) is a document filed on the GST portal that allows you to export services/goods without paying IGST upfront. With LUT, exports are zero-rated (0% GST). Without LUT, you must pay IGST on exports and claim refund later - blocking your working capital. LUT is valid for one financial year and must be renewed annually.

Question 2

What is the GST registration threshold for service exporters?

Accepted Answer

For most states, registration is mandatory when aggregate turnover exceeds ₹20 lakh. For special category states (North-Eastern states, Himachal Pradesh, Uttarakhand), the threshold is ₹10 lakh. Export revenue counts toward aggregate turnover even though it's zero-rated.

Question 3

Can I claim ITC refund on export services even if I pay 0% GST?

Accepted Answer

Yes! This is a major benefit for exporters. Even though you pay 0% GST on exports, you can claim full refund of Input Tax Credit (ITC) on your business expenses. File refund application (RFD-01A) on GST portal. Ensure payments are received in convertible foreign exchange to qualify.

Question 4

What conditions must be met for services to qualify as exports?

Accepted Answer

For services to qualify as exports: (1) Service recipient must be located outside India, (2) Payment must be received in convertible foreign exchange or Indian rupees where RBI permits, (3) The place of supply must be outside India, (4) The service provider must be in India. All conditions must be satisfied.

Question 5

Do I need to file any specific returns for export services?

Accepted Answer

Yes, export details must be reported in GSTR-1 under Table 6A (exports with payment of tax) or Table 6B (exports under LUT without payment). You also need to file shipping bills or export invoices. For refund claims, additional documents like FIRC/e-BRC (bank realization certificate) are required as proof of foreign exchange receipt.

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