Export of Services under GST

[AKSHAT AGARWAL]

Seeking experts guidance in the forum

In one of our case, client have received substantial amount in bank account towards ecommerce website and development services provided to clients located outside India during FY 2024-25. Client is registered taxpayer in GST and have filed nil return till Feb-25. Payment has directly been received in INR in his bank account. Billing is done in USD to clients. What happen is that client have not filed any LUT for FY 2024-25 for availment of benefit of export of services without payment of tax as he is not aware for any of such compliance.

My question is that what treatment should be done in respect of payment received during the year FY 2024-25 (till March-25) and should we pay GST on such export considering the same as export made with payment of tax @ 18% on total payment received during the year and its treatment in March-25 GSTR-1 & GSTR-3B ?

[Ganeshan Kalyani]

Did you receive any notice from GST department ?

[AKSHAT AGARWAL]

Sir, We have not received any notice yet. But I am looking for correction in March-25 return in order to avoid any future litigation in the matter.

Thanks

[Raam Srinivasan Swaminathan Kalpathi]

Please file for LUT relating to financial year 2024-25 now.  Non-filing of LUT is only a technical mistake and GST authorities cannot insist on remittance of GST.  You may take comfort from para no. 44 of GST refund master Circular 125 issued in 2019 which clearly delineates that non-filing of LUT is only a procedural lapse.

[AKSHAT AGARWAL]

Option to file Lut for fy 24 25 is not available on portal now.

[Raam Srinivasan Swaminathan Kalpathi]

Please meet the jurisdictional Suptt. and explain the issue and file LUT in Form RFD-11 in manual form.  You can always explain a technical lapse.

[KASTURI SETHI]

No IGST is required to be paid. You have not caused any revenue loss. You can file LUT manually. 

[AKSHAT AGARWAL]

Sir another question is striking whether it is export of service or not as payment is crediting in client account directly in INR. One of condition under sec 2(6) is payment is received in CFE however can be received in INR wherever permitted by RBI. What impact does it carries ?

[Raam Srinivasan Swaminathan Kalpathi]

Please read the highlighted portion. You may take a certificate from your banker also. Also see master Circular 125 of 2019 which explains the procedural aspects for export of services under LUT

(6) “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 ¹[or in Indian rupees wherever permitted by the Reserve Bank of India]; and

(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;

[KASTURI SETHI]

Dear Querist,

Do not be a victim of phobia of the department. You have got fool-proof and detailed and correct reply from Sh. Kalpathi, Sir.

[Vijay kumar]

1. Not filing LUT is only a technical / procedural lapse. No need to pay GST in my view.

2. If payment is received in INR as per RBI guidelines/permission, then there is no issue. If not, it cannot be treated as export of service as per Sn.2(6) of IGST Act'17. 

[AKSHAT AGARWAL]

I would like to thank every experts for their valuable guidance and prompt replies. 

[Shilpi Jain]

Chk the source of the INR that is credited to your account. If its come from a foreign currency account of the customer, then it is as good as foreign currency received.

Chk with your bank to provide you FIRC which is the proof of receipt of foreign exchange.

LUT apply on portal or manually.

[AKSHAT AGARWAL]

Ok Ma'am noted.

[Sadanand Bulbule]

I welcome the united opinion of the experts.

[GAGAN KEDIA]

Dear Queriest,

In continutaion to above responses, please refer to RBI Circular - RBI/2022-2023/90 A.P (DIR Seriees) Circular No. 10.

RBI, in order strengthen Rupee and promote global trade with emphasis on exports from India, has put in place certain guidelines for settlement of exports in INR.

In case the exports proceeds are paid in INR from the balances in the designated special Vostro Account of the correspondent bank of the partner country, it would be falling under the clause "or INR wherever permitted by RBI" in Sec. 2(6) of IGST Act.

While checking the above, also refer to para 10 of the said circular to ensure that the correspondent foreign bank is not from a country/ jurisdiction in the updated FAFT public statement on High Rish, for which FAFT has called for counter measures.

In such cases, INR receipts would not qualify as export of service.   

AI Summary

Export of Services Without LUT Filing: Procedural Lapse Only, No IGST Payment Required Under GST Rules The discussion concerns GST treatment for export of services where a client provided e-commerce website development services to foreign clients but did not file Letter of Undertaking (LUT) for FY 2024-25. Experts advise that non-filing of LUT is only a procedural lapse, referencing GST refund master Circular 125 (2019), and recommend filing LUT manually with jurisdictional authorities. They clarify that no IGST payment is required. Regarding payments received in INR rather than foreign currency, experts note this qualifies as export of services if permitted by RBI under Section 2(6) of IGST Act, suggesting verification with the bank for FIRC (Foreign Inward Remittance Certificate) and checking RBI Circular RBI/2022-2023/90 for compliance.