Structure Foreign Income as Exports for 0% GST
YouTube/Patreon income = export of services = 0% GST. File LUT for zero-rating. Save 18% GST.
What is This Hack?
Foreign payments from YouTube AdSense, Patreon, and international brand deals qualify as export of services under GST, making them eligible for 0% GST (zero-rated). File LUT on GST portal to export without paying GST, saving 18% on all foreign income.
How It Works
Understanding Export of Services
Under GST law, when an Indian service provider provides services to a foreign recipient (located outside India), and the payment is received in foreign currency (or convertible INR), the transaction qualifies as 'export of services' under Section 2(6) of IGST Act. Key conditions: 1. Service recipient is located outside India 2. Payment received in convertible foreign exchange 3. Service provider and recipient are not related establishments Export of services = 0% GST (zero-rated, NOT exempt). Difference: Zero-rated means you can claim input tax credit. Exempt means no ITC.
Creator Income Qualifying as Export
Most creator income from abroad qualifies: • **YouTube AdSense**: Google Ireland pays you in USD/INR. Recipient = Google (Ireland). Qualifies as export. • **Patreon**: Patreon Inc (USA) pays you. Qualifies as export. • **Brand Deals with Foreign Brands**: Nike (USA), Samsung (Korea) pay for sponsored content. Export. • **Online Courses**: Teachable, Udemy, Gumroad sales to foreign customers. Export. • **Consulting/Freelancing**: Upwork, Fiverr clients abroad. Export. • **Digital Products**: Selling ebooks, templates to foreign customers. Export. All these = 0% GST liability instead of 18%.
The Problem Without LUT
Without proper filing, you'd need to: 1. Charge 18% IGST on foreign income 2. Pay it to government 3. Then claim refund (takes 2-6 months) Example: ₹30L YouTube income → Pay ₹5.4L GST upfront → Wait months for refund. This blocks cash flow and creates compliance burden.
LUT: The Solution
LUT (Letter of Undertaking) under Rule 96A allows you to supply export services at 0% GST WITHOUT paying GST upfront or furnishing a bond. Once LUT is filed: 1. No need to pay GST on exports 2. No need to claim refund 3. Can still claim input tax credit on business expenses 4. Valid for entire financial year (renew annually) LUT = Cash flow freedom + Zero GST liability on foreign income.
Tax Savings Calculation
**Scenario 1: ₹20L Annual YouTube Income** - Without export classification: ₹20L × 18% = ₹3.6L GST liability - With LUT + export classification: ₹0 GST - Savings: ₹3,60,000 annually **Scenario 2: ₹50L Annual Foreign Income (YouTube + Patreon + Courses)** - Without: ₹50L × 18% = ₹9L GST - With LUT: ₹0 - Savings: ₹9,00,000 annually **Scenario 3: ₹10L Foreign Income + ₹5L Domestic Income** - Foreign income: 0% GST (via LUT) - Domestic income: 18% GST = ₹90,000 - Total GST: ₹90,000 (instead of ₹2.7L on full ₹15L) - Savings: ₹1,80,000
Documentation Requirements
To prove export status, maintain: 1. **FIRC (Foreign Inward Remittance Certificate)**: Bank certificate showing foreign currency received 2. **Invoices**: Clearly marked 'Export of Services - Zero Rated Supply' 3. **Recipient Details**: Name, address, country of foreign recipient 4. **Payment Proof**: Bank statement showing foreign currency credit 5. **Service Description**: Nature of service provided (content creation, consulting, etc.) For YouTube/Patreon: Download payment statements showing USD receipt + bank FIRC.
Prerequisites & Requirements
- GST registration
- Bank account
- LUT filing on GST portal
Key Benefits
- Potential savings: ₹50,000-5,00,000 annually
- Implementation time: 1-2 weeks
- Legal status: fully legal
- Risk level: low
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