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Yes—an Indian SaaS subscription can qualify as an export of services under GST, but only when all five statutory conditions are satisfied. The supplier must be in India, the customer outside India, the place of supply outside India, payment received in convertible foreign exchange, and the parties must not be merely establishments of the same legal person. When those tests are met, the supply is zero-rated: you can either export under a bond or Letter of Undertaking (LUT) without charging IGST, or charge IGST and seek a refund. A foreign billing address alone is not enough.
The five conditions that make SaaS an export
CBIC’s sectoral FAQ treats export status as a cumulative test. Missing any one condition can remove zero-rated treatment, even when the customer is overseas and the software is delivered online.
1. The supplier is located in India
Your contracting and supplying entity must be located in India for the transaction being examined. Keep the GST registration, legal-entity details and contract party consistent with the entity shown on the tax invoice.
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The customer receiving the SaaS service must be outside India. Verify the customer’s legal name, registered address, contracting entity, tax or company identifier where available, and the user or account structure. A payment processor, reseller or an overseas billing address does not by itself establish who the recipient is.
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3. The place of supply is outside India
For services other than specified exceptions, section 13 of the IGST Act generally places the supply where the recipient is located. That is the usual starting point for a normal business SaaS subscription. Special rules can change the result, particularly for intermediary services, supplies between establishments of the same person, and certain cloud or data-hosting arrangements.
4. Payment is received in convertible foreign exchange
Retain the bank evidence showing receipt of the export proceeds in convertible foreign exchange. Match the remittance to the relevant invoices and preserve the bank realisation or foreign inward remittance documentation needed for a refund claim.
5. The parties are not establishments of a distinct person
The supplier and recipient cannot simply be two establishments of the same person for section 8 purposes. An Indian branch or establishment supplying its overseas head office, or the reverse structure, needs separate analysis; the same-person relationship can prevent export treatment.
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Because the conditions operate together, build an evidence file rather than relying on a single customer address. Include the signed order or master agreement, customer-location material, invoice, service description, payment trail and any documents explaining the contracting and consuming entities.
How place of supply works for a SaaS subscription
Most SaaS subscriptions are supplied on a recurring basis to a business customer. For this ordinary pattern, the recipient-location rule is the practical baseline: identify the entity that purchased the subscription and establish where that entity is located. The analysis is not decided by where the servers, developers or users happen to sit.
When the recipient’s location is unavailable
If the recipient’s location cannot be determined in the ordinary course of business, section 13’s default moves the place of supply to the supplier’s location. That outcome can defeat export treatment, so customer-onboarding records should make the recipient identifiable before invoicing.
Intermediary arrangements
If the Indian entity is arranging or facilitating someone else’s supply instead of supplying SaaS on its own account, it may be an intermediary. CBIC’s position is that intermediary services use the supplier’s location as the place of supply. In that fact pattern, the place of supply can be India even though the customer or principal is overseas.
Review the contract, who sets the commercial terms, who bears performance risk, who issues the customer invoice and whether the Indian entity is supplying its own software. Do not label a resale, referral or facilitation model as a standard SaaS export without analysing those functions.
Distinct establishments of one person
Circular 161/17/2021-GST states that a supply by an establishment of a foreign company in India to another establishment of that company outside India is not covered by the definition of export of services. Shared ownership, common branding or an overseas parent does not answer the question by itself; determine whether the two establishments are legally the same person for the GST analysis.
Cloud and data-hosting contracts
Circular 232/26/2024-GST indicates that cloud and data-hosting arrangements require a specific contractual and functional analysis. Identify exactly what is supplied—software access, hosting capacity, managed infrastructure, storage or an arrangement of another party’s service—and apply the appropriate place-of-supply rule to those facts.
Can you invoice a foreign customer without IGST?
Yes, when the supply qualifies as zero-rated export and you have furnished a bond or LUT for the relevant financial year. The LUT route lets you issue the export invoice without payment of IGST and later seek a refund of eligible unutilized input tax credit (ITC).
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1Clear out junk files and repair common Windows errors2Fix the driver behind crashes, sound loss and screen glitches3Repair Windows errors before they cause bigger problemsYou also have a second statutory route: pay IGST on the export and claim a refund of the IGST paid. The choice affects cash flow and documentation, not the underlying five-part export test. Zero-rating does not mean that every overseas invoice is automatically tax-free.
| Export route | What happens on the invoice | Refund sought | Main cash-flow effect |
|---|---|---|---|
| IGST-paid export | IGST is paid on the export supply | Refund of the IGST paid | Tax is funded until the refund is processed |
| LUT or bond export | Export is made without payment of IGST | Refund of eligible unutilized ITC | No IGST payment on the invoice, but ITC remains tied to the refund calculation |
Exports and supplies to SEZ units or SEZ developers are described by CBIC as zero-rated. An SEZ transaction still requires the applicable documentation and does not remove the need to establish the nature and recipient of the supply.
How to furnish an LUT on the GST Portal
Use the GST Portal at https://www.gst.gov.in. The portal’s official workflow is:
- Sign in to the GST Portal.
- Open Services > User Services > Furnish Letter of Undertaking (LUT).
- Select the financial year for which the LUT will apply.
- Upload the previous LUT where the portal requests it and where it is applicable.
- Accept the declarations shown on the form.
- Enter details for two independent and reliable witnesses.
- Submit the LUT and save the acknowledgement reference number (ARN) and accepted document.
Use the financial year that corresponds to the exports you plan to make. Portal screens and filing requirements can change, so verify the labels and requirements displayed at the time of filing. Keep the ARN, accepted LUT, signing details and the related export invoices in the same compliance file.
Refunds through FORM GST RFD-01
Refund applications are filed electronically in FORM GST RFD-01. For export-of-services claims, the refund rules require invoice number and date statements and the relevant Bank Realisation Certificates (BRCs) or Foreign Inward Remittance Certificates (FIRCs). A claim should be supportable from the invoice ledger through the bank receipt, not merely from a sales report.
Documents to reconcile before filing
- Export invoices, including invoice numbers, dates, recipient details and the export declaration used for the chosen route.
- Customer contract, order form and evidence establishing the overseas recipient.
- BRC or FIRC records matched to the invoices and the amounts received.
- GSTR-1 and GSTR-3B reporting for the relevant periods.
- Input-tax-credit ledger and the ITC figures used in the refund calculation.
- LUT ARN and accepted LUT, if the supply was made without IGST.
Formula for an LUT-based unutilized-ITC refund
The rules prescribe this formula:
Refund = (turnover of zero-rated goods + turnover of zero-rated services) × Net ITC ÷ adjusted total turnover.
For export-of-services turnover, the rules take account of payments received during the relevant period, completed export services for which payment was received in an earlier period, and the subtraction of advances for services not completed during the relevant period. That timing makes bank-receipt reconciliation important for recurring SaaS subscriptions and annual prepayments.
Practical reconciliation sequence
- List every export invoice included in the claim and identify the customer and service period.
- Match each received amount to a BRC or FIRC and record any invoice covered by an earlier-period receipt.
- Separate advances for services not completed in the relevant period so they are treated correctly in export turnover.
- Reconcile the zero-rated turnover with GSTR-1 and the tax figures reported in GSTR-3B.
- Recalculate Net ITC and adjusted total turnover from the accounting and GST records.
- Submit RFD-01 with the required statements and retain the working papers supporting every amount.
What happens when the five-part test fails?
Do not use the LUT or claim a zero-rated refund until the failed condition is resolved or the transaction is correctly classified. The common failure points are operational rather than mathematical:
- Weak recipient evidence: the file shows only a foreign billing address, with no contract or legal-entity proof.
- Wrong place-of-supply rule: the service is intermediary, falls under a special rule, or the recipient cannot be established.
- Same-person establishments: the overseas counterparty is an establishment of the same person as the Indian supplier.
- Insufficient payment evidence: the bank record cannot be linked to the invoices or does not demonstrate the required convertible-foreign-exchange receipt.
- Reporting mismatch: invoice data, GSTR-1, GSTR-3B, the ITC ledger and the refund statement contain different values or periods.
Correct the classification and records before filing rather than trying to cure a failed export condition with a later LUT. Where the contract combines software access with hosting, implementation, resale or facilitation, document the functions and consideration separately when that reflects the actual supply.
Where the 18% IT-services rate fits
CBIC’s sectoral FAQ lists 18% for IT services in its 2017-era material. That figure is relevant when the supply is taxable in India; it does not override the export test or convert a non-export into a zero-rated supply. Treat the quoted rate as the FAQ’s stated rate and verify the applicable rate for the transaction and period before invoicing.
A decision checklist for each overseas SaaS invoice
- Identify the actual contracting recipient and confirm that it is located outside India.
- Classify what the Indian entity supplies: its own SaaS, an intermediary service, hosting or another arrangement.
- Apply the place-of-supply rule and record why the place is outside India.
- Check that the parties are not establishments of a distinct person.
- Confirm that consideration will be received in convertible foreign exchange and that the bank trail can be matched.
- Choose IGST-paid export or LUT/bond export for the financial year.
- Issue the invoice consistently with that route and retain the contract, recipient evidence and payment records.
- Before RFD-01, reconcile invoices, BRCs/FIRCs, returns, ITC and the formula inputs.
This workflow answers the practical questions behind cross-border SaaS billing: an overseas customer can be invoiced without IGST only where the complete export test is met and an LUT or bond route is in place; otherwise, use the IGST-paid route only when the supply is in fact an eligible export, and resolve any place-of-supply or same-person issue first.
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