What is meant by “export of services” under GST?
As per section 2(6) of the IGST Act, 2017, "export of services" means the supply of any service when,
(i) The supplier of service is located in India
(ii) The recipient of service is located outside India
(iii) The place of supply of service is outside India
(iv) The payment for such service has been received by the supplier of service in convertible foreign exchange or Indian rupees wherever permitted by the Reserve Bank of India
(v) The supplier of service and the recipient of service are not merely establishments of a distinct person in accordance with Explanation 1 in section 8.
Is GST applicable for the export of services?
The export of services is considered a zero-rated supply. Therefore, no GST is applicable on the export of services.
What is the export of services under LUT?
An exporter may choose to pay IGST on exports and claim a refund or may file LUT and proceed with exports without paying the IGST.
LUT is a Letter of Undertaking to be furnished in form GST RFD 11 under rule 96A, whereby the exporter declares that he/she would fulfill all the requirements prescribed under GST while exporting without making an IGST payment.
Can Input tax credit be claimed against the export of services?
Yes. ITC can be claimed against the export of services. Unutilized ITC can be claimed as a refund.
Where do I report the export of services under GST in GSTR 1?
Export of services is to be disclosed in table no. 6A of GSTR 1.
Where do I report the export of services under GST in GSTR 3B?
Export of services is to be disclosed in table no. 3.1 – b of GSTR 3B.
Conclusion
The concept of "export of services" under GST entails the supply of services from India to a recipient located outside India, meeting specific criteria outlined in the IGST Act. Notably, the export of services is considered a zero-rated supply, exempt from GST.
Exporters have the option to either pay IGST and claim a refund or furnish a Letter of Undertaking (LUT) to proceed with exports without IGST payment. Additionally, exporters can claim Input Tax Credit (ITC) against the export of services, with unutilized ITC eligible for refund. Proper reporting of the export of services in GSTR-1 and GSTR-3B ensures compliance with GST regulations.
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