Specialist handling of GST refund claims for service exporters — IT firms, consultancies, BPOs, professionals, and NRI-owned entities — where payment is received in foreign exchange from overseas recipients.
Section 2(6) IGST ActSection 16 IGST ActSection 13 — Place of SupplyRule 89 CGST RulesFIRC / BRCLUT / Bond
₹40Cr+
SERVICE EXPORT REFUNDS
150+
SERVICE EXPORTER CLIENTS
NRI
VIRTUAL CONSULTS AVAILABLE
2 Yrs
LIMITATION — ACT FAST
LEGAL FRAMEWORK
The Four Conditions That Define an Export of Services
SECTION 2(6) — IGST ACT, 2017 — DEFINITION OF EXPORT OF SERVICES
"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 the service is outside India; (iv) the payment for such service has been received by the supplier of service in convertible foreign exchange 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."
SECTION 16(1)(b) — IGST ACT, 2017 — ZERO RATED SUPPLY
"Zero rated supply means any of the following supplies of goods or services or both, namely: supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit."
"A registered person making zero rated supply shall be eligible to claim refund of unutilised input tax credit on supply of goods or services or both, without payment of integrated tax, under bond or Letter of Undertaking, in accordance with the provisions of Section 54 of the Central Goods and Services Tax Act or the rules made thereunder."
All five conditions under Section 2(6) must be satisfied simultaneously for a supply to qualify as export of services. The most frequently contested conditions in departmental scrutiny are the place of supply determination under Section 13 of the IGST Act and proof of receipt of payment in convertible foreign exchange. Vertax Partners conducts a mandatory pre-filing assessment of all five conditions before any refund application is submitted.
Critical — Place of Supply Determination
Place of supply for services to overseas recipients is governed by Section 13 of the IGST Act, 2017. The default rule under Section 13(2) places the supply at the location of the recipient — outside India. However, specific services under Sections 13(3) to 13(13) have overriding place of supply rules that may locate the supply in India, thereby disqualifying the transaction from export treatment. This analysis is mandatory before filing any refund claim.
ELIGIBILITY MATRIX
Condition-by-Condition Eligibility Assessment
Every condition under Section 2(6) is assessed against your specific service type and transaction structure before filing.
#
Condition
What It Means in Practice
Common Issue
Status
01
Supplier located in India
The GST-registered entity providing the service must be located in India — established by GSTIN registration.
Rarely disputed
CLEAR
02
Recipient located outside India
The recipient must be a foreign entity or individual located outside India. Related party / branch office arrangements may fail this condition.
Distinct person issue for MNC groups
VERIFY
03
Place of supply outside India
Must be determined under Section 13 IGST Act. Default rule (Sec 13(2)) locates supply at recipient's location. Overriding rules (Sec 13(3)–13(13)) may change this for specific service categories.
Most contested — service-type specific
CRITICAL
04
Payment in foreign exchange
Payment must be received in convertible foreign exchange or in INR where RBI permits. FIRC / BRC from bank is the primary documentary proof.
FIRC procurement delays; partial INR payments
DOCUMENT
05
No distinct person relationship
Supplier and recipient must not merely be establishments of the same legal entity. Indian subsidiary providing services to foreign parent may fail this condition.
Indian subsidiary — foreign parent transactions
HIGH RISK
Intermediary Services — A Critical Disqualification Risk
Under Section 13(8)(b) of the IGST Act, the place of supply of intermediary services is the location of the supplier — i.e., India. Where a department classifies a service as intermediary (e.g., a facilitating, coordinating, or commission-based service between two parties), the place of supply shifts to India, making the supply taxable and disqualifying the export refund claim. This is the single most litigated issue in service export refund matters. Vertax Partners conducts a dedicated intermediary risk analysis on every service export mandate.
SECTORS WE SERVE
Service Categories We Handle
IT & Software
SaaS, custom development, tech support
Consulting & Advisory
Management, financial, legal advisory
BPO / KPO Services
Back-office, data processing, analytics
Education & Training
Online training, e-learning to overseas
Creative & Design
Graphic design, content, branding
NRI-Owned Entities
Any service exported by NRI-owned Indian firms
REFUND ROUTES
Two Routes to Refund — Which One Applies to You
ROUTE A
IGST Refund on Services Exported with Tax Payment
Where the service exporter has paid IGST on export invoices (i.e., without LUT), refund of IGST paid is claimed via Form RFD-01 under Section 54(1) of the CGST Act. Less common — most exporters use LUT route to avoid blocking funds.
ROUTE B — PREFERRED
ITC Refund on Zero-Rated Services Exported under LUT
Where the service exporter has filed a valid LUT and exported services without payment of IGST, the accumulated Input Tax Credit on inputs and input services is eligible for refund under Section 54(3) read with Rule 89 of the CGST Rules. This is the standard route for service exporters.
ROUTE C
Refund of ITC on SEZ Supplies
Supplies of services to SEZ developers or units are also zero-rated under Section 16(1)(b). Separate refund mechanism applies — supplier can claim refund of IGST paid or ITC accumulated, with endorsement from SEZ specified officer.
OUR PROCESS
How We Handle Your Service Export Refund
01
Five-Condition Eligibility Review
Statutory assessment of all Section 2(6) conditions including place of supply determination and intermediary risk analysis.
DAY 1–3
02
FIRC / BRC Procurement & Matching
Coordination with bank for FIRC issuance. Invoice-to-FIRC matching for each export transaction in the claim period.
DAY 3–7
03
GSTR-1 / 3B Reconciliation
Verification of Table 6A entries in GSTR-1 against GSTR-3B for the claim period. Discrepancies addressed before filing.
DAY 5–10
04
RFD-01 Application Filing
Preparation and filing of refund application on GST portal with all supporting documents — Statement 3 for service exports under LUT.
DAY 10–14
05
Deficiency Response & Hearing
Response to RFD-03 deficiency memos within statutory window. Representation at personal hearing if required by officer.
IF RAISED
06
Sanction Order & Disbursal
Follow-up for RFD-06 sanction order and credit to registered bank account. Post-disbursal compliance verification.
FINAL
DOCUMENTATION CHECKLIST
Documents Required for Service Export Refund
Mandatory for All Routes
Export service invoices (all periods in claim)
Foreign Inward Remittance Certificates (FIRC) — one per payment
Bank Realisation Certificate (BRC) from AD bank
Service export agreement / engagement letter with overseas client
GSTR-1 returns — Table 6A entries for export of services
GSTR-3B returns for the claim period
LUT acknowledgement for the relevant financial year
Form RFD-01 with Statement 3 (for ITC refund route)
Additional / Situational Documents
PAN and GSTIN of the service recipient (if available)
Board resolution / authorisation for LUT filing
Purchase invoices of input services claimed as ITC
GSTR-2B reconciliation for ITC claimed in the period
Bank statement showing foreign currency receipts
CA certificate as per Rule 89(2)(m) — for claims above ₹2L
Self-declaration of non-prosecution (Rule 89(2)(l))
Correspondence with overseas client establishing nature of service
REJECTION GROUNDS & REMEDIES
Why Service Export Refunds Are Rejected — and How We Fight Each
Classified as Intermediary Service
Department holds that the Indian entity merely arranges services between two foreign parties — place of supply shifts to India under Sec 13(8)(b).
Remedy: Detailed reply establishing principal service character with contract evidence and judicial precedents
FIRC Not Available / Mismatched
FIRC amount does not match invoice value, or FIRC was not obtained from the bank for older transactions.
Remedy: Retrospective FIRC procurement from AD bank + bank statement corroboration
Place of Supply Disputed
Officer disputes that place of supply is outside India — particularly for services related to immovable property, events, or performance-based services.
Remedy: Statutory analysis of applicable Sec 13 sub-section with case law citations
Distinct Person — Related Party
Indian entity providing services to foreign parent or group company — department questions whether export definition is satisfied under Sec 2(6)(v).
Remedy: Structuring analysis and arm's length documentation per transfer pricing principles
LUT Not Valid for Export Period
LUT was not filed or was filed after the date of export — prior exports treated as taxable and refund disallowed for that period.
Remedy: IGST payment with interest for pre-LUT period and fresh claim on refund of tax paid
GSTR-1 Table 6A Errors
Export of services not reported under Table 6A in GSTR-1 — reported under wrong table — leads to refund application rejection.
Remedy: GSTR-1 amendment via Table 9A for prior periods and correct reporting going forward
FREQUENTLY ASKED
Questions Service Exporters Ask Before Engaging
We receive payment in INR from our foreign client — does that still qualify as export of services?
Section 2(6)(iv) of the IGST Act requires payment in convertible foreign exchange or in Indian rupees wherever permitted by the Reserve Bank of India. Where RBI has specifically permitted INR payments in certain bilateral arrangements or for specific service categories, INR receipt qualifies. This must be verified against the current RBI framework applicable to your transaction. We assess this as part of our eligibility review.
Our Indian company provides IT support services to our US parent company — do we qualify?
This depends on whether your Indian entity and the US parent are considered establishments of a distinct person under Section 2(6)(v) read with Explanation 1 to Section 8 of the IGST Act. If both are branches or establishments of the same legal entity, the condition fails. If they are separate legal entities under common ownership, the analysis depends on how the relationship is structured. This is one of the most litigated questions in service export refunds and requires a detailed legal assessment.
We did not file a LUT for certain years — can we still claim refund for those periods?
Where no LUT was filed for a particular financial year, exports made without IGST payment for that period are technically non-compliant. The options available are: (a) pay the applicable IGST with interest and claim refund of tax paid, or (b) apply for condonation if the department exercises discretion. We assess the viability of both approaches based on the quantum involved and the period in question, within the 2-year limitation under Section 54(1).
Our refund was rejected on grounds of intermediary services — can it be appealed?
Yes — and this is one of the most winnable grounds on appeal, given extensive favourable jurisprudence from the High Courts. The key argument is the distinction between a principal service provider and an intermediary under Section 2(13) of the IGST Act. Several High Courts have held that an entity providing its own services to an overseas recipient does not become an intermediary merely because the service benefits a third party. Vertax Partners has handled multiple such appellate matters with successful outcomes.
Free Eligibility Assessment
We assess all five Section 2(6) conditions against your specific service and transaction structure — before you file a single document.
Before filing any service export refund, we conduct a dedicated intermediary classification review under Section 2(13) and Section 13(8)(b) of the IGST Act. This single issue accounts for over 60% of service export refund rejections.
Limitation Period
2 Years
SECTION 54(1) — CGST ACT
Relevant date for service exports is the date of receipt of payment in foreign exchange. Unclaimed refunds for past periods may still be within limitation — contact us immediately to assess.