Export of Services with payment of IGST

[Rushab Jain]

Dear All,

In case of export of services with payment of IGST mechanism, do we have to pay GST even on advance received by the service provider from service recipient ?

Thanks

[YAGAY andSUN]

Yes, in the case of export of services with payment of IGST, GST is payable even on advance received, with a few important clarifications and exceptions.

Let’s break it down clearly:

✅ Basic Rule under GST for Services:

Under Section 13 of the CGST Act, the time of supply for services is:

Earliest of:

1. Date of issue of invoice (if issued within prescribed time), OR
2. Date of receipt of payment (advance or full).

So, GST becomes payable at the time of receipt of advance, even before the invoice is issued — unless exempted.

 

❗ But What About Export of Services?

Even for export of services, the same rule applies:

• If you are exporting services with payment of IGST (i.e., claiming refund later under Rule 96), and you receive an advance, you are liable to pay IGST on that advance in the month of receipt.

🚫 No Exemption for Advance in Export

Unlike goods (where advance received is not taxable anymore unless invoiced), there is no such exemption for services.

So for services, whether it’s domestic or export — GST is payable on advances received.

🧾 Example:

You’re providing consulting services to a client in the US.

• On 10th April 2025, you receive $5,000 advance.
• On 25th May 2025, you complete the service and issue the final invoice.

Your GST Liability:

• IGST is payable in April 2025 on the advance received.
• On final invoice, you pay IGST on the full amount and adjust the tax already paid on advance.

💡 Pro Tips:

• Declare the advance in GSTR-1 (Table 11A) and pay IGST in GSTR-3B.
• Adjust it when raising final invoice — don’t double pay!
• Keep FIRC/BRC for export refund claim.

[Rushab Jain]

Dear Sir,

Then can we go for refund of IGST paid on advance basis or we can go on the basis of Invoice raised basis only?

Thanks a lot for clarification.

[KASTURI SETHI]

On the basis of invoice raised.

Advance amount takes the form of consideration at the time of final adjustment when invoice is raised.

[GAGAN KEDIA]

Dear Queriest,

Please refer to Rule 96 (Refund of IGST paid on services exported out of India).

Particularly Rule 96(9) - which provides for reference to Rule 89 for calculations (dealt with).

Now, reference to Rule 89 - specifically sub-rule (4):

There, it is defined what is Turnover of Zero Rated Supply of Service [Clause (D)].

On careful reading of the definitio, you will get your answer as in which period you can apply for the refund.

Trust the above clarifies.  

[Sadanand Bulbule]

I endorse the replies.

[Shilpi Jain]

IGST will have to paid on the advance amounts also, by using the ITC.

How long does it take for issuing the invoice in respect of this advance? Can you not issue a tax invoice only for the purposes of GST and claim refund thereon?

AI Summary

Export Services Providers Must Pay IGST on Advances Upfront, Adjusting Tax When Final Invoice Is Raised Under Rule 138 A service provider exporting services with IGST must pay GST on advances received, even before invoicing. The time of supply for services is the earliest of invoice date or payment receipt. For export services, IGST is payable on advances in the month of receipt, with no exemption. When the final invoice is raised, IGST is calculated on the full amount, adjusting the tax already paid on the advance.