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An Indian clinical research provider may be able to export services at zero rate and claim a GST refund, but an overseas sponsor or foreign-currency invoice does not establish eligibility on its own. The supplier must meet every condition in the IGST Act’s definition of an export of services. If it qualifies, it can generally export under a Letter of Undertaking (LUT) or bond without paying IGST and seek a refund of eligible unutilized input tax credit (ITC), or pay IGST on the export and seek a refund of that tax.
First, check whether the clinical research service is an export
Under section 2(6) of the Integrated Goods and Services Tax (IGST) Act, a supply counts as an export of services only when all five statutory conditions are met. Assess them against the actual contract and transaction—not just the invoice address or the fact that a study is international.
- The supplier is located in India.
- The recipient is located outside India. Identify the party that actually contracts for and receives the service, rather than assuming the named overseas sponsor is necessarily the recipient.
- The place of supply is outside India. This is a separate statutory test; the recipient’s overseas location alone does not settle it.
- Payment is received in convertible foreign exchange, or in Indian rupees where the Reserve Bank of India permits it. Check the payment route and currency against the applicable requirements.
- The supplier and recipient are not merely establishments of a distinct person under the Act’s explanation to the definition.
For a clinical research organization, review the agreement, statement of work, amendments, deliverables, operational arrangements, payment terms, and parties’ legal relationship. Consider who directs the work, who receives its outputs, and whether an Indian affiliate is involved. A group-company relationship does not by itself settle the distinct-person question: CBIC Circular 161/17/2021-GST clarifies that certain supplies by Indian subsidiaries, sister concerns, or group concerns to a foreign company can satisfy that condition. The specific legal relationship and supply still need assessment.
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Choose between the two zero-rating refund routes
Section 16 of the IGST Act provides the zero-rating framework. A qualifying supplier generally chooses between supplying under an LUT or bond without payment of IGST and claiming eligible unutilized ITC, or paying IGST on the zero-rated supply and seeking a refund of the tax paid. The appropriate route depends on the transaction, applicable restrictions, ITC position, and cash flow.
| Route | What happens | What to weigh |
|---|---|---|
| Without payment of IGST, under LUT or bond | The qualifying export is made without upfront IGST. The supplier may apply for a refund of eligible unutilized ITC, calculated under the applicable Rule 89 formula and subject to its conditions. | Eligible accumulated ITC, the rule’s calculation of service-export turnover, the records supporting credits, and the effect on working capital. |
| With payment of IGST | The supplier pays IGST on the qualifying zero-rated supply and may claim a refund of that tax, subject to applicable conditions and safeguards. | The ability to fund the tax while a claim is pending, eligibility to use this route, and reconciliation of tax paid with export invoices and returns. |
Neither route is universally better. Compare them using the facts and rules applicable to the relevant period; do not assume that the invoice value itself determines the refund.
Understand how the unutilized-ITC refund is calculated
For a claim relating to zero-rated exports made without payment of tax, Rule 89 provides a formula. In simplified terms, the refund is linked to the turnover of zero-rated supplies and eligible Net ITC, relative to adjusted total turnover. The rule’s definitions and conditions—not the total GST shown on purchase invoices—control the calculation.
For zero-rated service turnover, Rule 89 takes account of payments received during the relevant period for the services, as well as completed services for which payment was received in advance. It also accounts for advances for services not completed during that period. Eligible Net ITC, adjusted total turnover, and other rule conditions can affect the result. The claim therefore requires a period-specific reconciliation rather than a simple reimbursement of all input tax.
Prepare the service-export records and evidence
The refund rules provide for an electronic application in FORM GST RFD-01 through the common portal. For export-of-services claims, the rules identify export invoice numbers and dates and relevant Bank Realisation Certificate (BRC) or Foreign Inward Remittance Certificate (FIRC) details as supporting information. CBIC Circular 125/44/2019-GST also explains the electronic refund process and remittance evidence for service-export claims.
Before filing, reconcile the records that establish both export eligibility and the amount claimed:
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- Contracts, statements of work, amendments, and deliverables that identify the recipient and scope of service.
- Export invoices and the corresponding export reporting and return data.
- Payment records and relevant BRC/FIRC details.
- Purchase invoices and records supporting eligible ITC.
- The relevant refund period and the figures used for the applicable Rule 89 calculation.
Use the service-export refund process and current GST portal instructions. Do not substitute goods-export workflows, such as a shipping-bill mechanism, for the applicable service claim.
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Use this filing checklist
- Confirm the Indian supplier’s GST registration and identify the rules applicable to the transaction period.
- Read the contract and related documents to establish who receives the service, what is supplied, and how the parties are related.
- Test all five export-of-services conditions, including place of supply and qualifying payment.
- Select the applicable zero-rating route—LUT or bond without IGST, or payment of IGST—based on the law and the business facts.
- Reconcile invoices, return reporting, payment evidence, eligible ITC, and the refund-period calculation.
- Submit the applicable electronic refund application and retain the supporting records.
Do not rely on a general processing-time statement as a promise of when a particular claim will be paid. Timing depends on the claim and applicable process; no current processing guarantee for a particular clinical research service claim is established here. For a contract with an uncertain recipient, place of supply, or related-party structure, seek advice from an Indian GST professional familiar with cross-border services.
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