Zero-rated, not exempt — what exports are under GST
Exports of goods and services are zero-rated supplies under GST, and the distinction from "exempt" matters commercially. An exempt supply carries no tax and blocks the input credits behind it. A zero-rated supply also charges the buyer nothing — but the exporter keeps the input tax credit on everything consumed in making the export, recovering it either as credit against other liability or as a refund. Zero-rating is how the tax system ensures Indian goods leave the country free of embedded GST, keeping them price-competitive abroad.
For the billing office, this means an export invoice is a real tax invoice — numbered in series, HSN-coded, fully reported — whose tax treatment differs from a domestic one. It is not an informal commercial document outside the GST system; it is inside the system with a special status, and the invoice must declare that status explicitly.
The two routes — LUT vs IGST paid with refund
Zero-rating is delivered through one of two mechanisms, chosen by the exporter:
| Aspect | Under LUT (without payment of IGST) | With payment of IGST (refund route) |
|---|---|---|
| Tax on the invoice | No IGST charged; invoice endorsed as issued under LUT | IGST shown and paid on the invoice |
| Prerequisite | LUT filed with GST authorities for the financial year | None beyond normal registration |
| Cash flow | No tax outflow at all | Tax paid now, refunded after export |
| Refund mechanics | Refund of accumulated input credits, claimed separately | Refund of the IGST paid, typically routed via the shipping bill |
| Best suited to | Regular exporters who file an LUT annually | Occasional exporters, or cases where the LUT route is unavailable |
Most regular exporters file the LUT — a one-page undertaking, renewed each financial year — because it removes the pay-first-refund-later cash cycle entirely. The refund route remains useful for occasional exports. The choice affects wording, tax computation and refund paperwork on every export invoice, so it should be a configured decision in your billing system, not a per-invoice improvisation. Which route suits your volumes and working capital is a conversation to have with your CA.
What an export invoice must carry
An export invoice contains everything a domestic tax invoice does — supplier identity and GSTIN, consecutive number and date, HSN-coded lines, taxable values, totals and amount in words — with these differences layered on top:
- The endorsement. A printed statement that the supply is meant for export under LUT without payment of integrated tax — or with payment of IGST, as applicable. This line is the invoice's claim to zero-rating.
- The foreign buyer. Name and address abroad, with country of destination. There is no buyer GSTIN — the field that drives the CGST/SGST/IGST split domestically simply does not apply.
- Tax columns that behave. Under LUT the GST columns are suppressed or zero; on the refund route IGST appears at the full rate. No CGST/SGST ever — an export is never an intra-state supply.
- Shipping linkage. Shipping bill number and date, port details and transport references connect the invoice to customs clearance — the trail refunds are verified against.
Billing exports on the same template as domestic sales?
See a domestic invoice and an export invoice raised side by side — LUT endorsement, suppressed GST, currency handling and separate series — in a 30-minute demo.
Currency, HSN digits and shipping details
Currency. Commercially, the invoice speaks the contract currency — USD, EUR, AED — because that is what the buyer pays and the bank realises. For GST reporting the values live in INR. A billing system built for export keeps both on the document, converted consistently, instead of leaving the INR working to a spreadsheet that drifts from the invoice.
HSN at full depth. Export documentation conventionally carries 8-digit HSN codes — the full tariff item — regardless of the shorter depths domestic invoices may use, because customs classification runs on the complete code. This is one more argument for a clean item ↔ HSN map: the same master serves domestic invoices at 4 or 6 digits and export documents at 8.
The document set. The export invoice travels with companions — packing list, shipping bill, transport documents — and the packing details flow naturally from the same dispatch data that feeds a domestic delivery challan and packing slip. One source document, several outputs, no re-typing.
Why exports get their own document series
In a well-built billing system, export invoices are a distinct document type with their own series — in Fast Billing's document engine, the EST/EIN variants alongside the domestic IN/NIN. This is not cosmetic. Returns ask for exports separately; refund claims are verified export-by-export; auditors want the export register in one pull. A separate series with its own numbering gives each of those a clean answer, while a mixed series means filtering and hoping.
The separation also protects behaviour: an export document type knows to print the endorsement, suppress or apply IGST per the configured route, skip the buyer-GSTIN validation, and carry currency and shipping fields. The operator picks "export invoice" and the document behaves; nobody edits a domestic template and hopes they caught every difference.
Returns, refunds and the paper trail
Exports are reported in your GST returns as zero-rated supplies, and the refund machinery — whether refunding IGST paid or accumulated input credits under LUT — cross-checks your invoices against shipping bills and customs data. The practical rule: the export invoice, the shipping bill and the return must tell one story. Same values, same dates within tolerance, same linkage. Mismatches do not usually mean penalties; they mean refunds that sit unprocessed while someone reconciles documents months after the shipment.
That is why the billing system's job on exports extends past printing a pretty invoice: it must keep the invoice, its dispatch, its shipping references and its INR values consistent and retrievable, and post the sale into Tally so the books carry the same numbers the return will. E-way bill and e-invoice data flow from the same source via GST, e-Way Bill & e-Invoice.
How Fast Billing Software handles exports
Fast Billing Software treats export billing as a first-class variant of its GST Tax Invoicing engine. Export invoices are raised as their own document types (the EST/EIN variants) in their own series, with GST suppressed under LUT or applied for the refund route as configured — the same against-dispatch discipline, the same double-bill guard, the same amount-in-words in Indian numbering, pointed at a foreign buyer. Packing slips and dispatch data feed the export document set, and every export sale posts to Tally alongside domestic sales, each on its correct ledgers.
Because domestic and export billing share one item master, one HSN map and one party master, a manufacturer selling in Nashik and shipping to Nairobi runs both from the same screen — with the document type, not the operator's memory, deciding what each invoice must say. Payments against export invoices flow through the same receipts and follow-up discipline, with realisations tracked against the invoices they clear.
Two markets, one billing system, zero template surgery
A pump maker sells across India and exports to East Africa under an annually-filed LUT. Domestic dispatches bill as IN-series invoices with CGST/SGST or IGST decided per buyer; export shipments bill as EST-series invoices carrying the LUT endorsement, no GST, USD values with INR alongside, 8-digit HSN and shipping bill references. Both series post to Tally, both draw on the same item and HSN masters, and at return time the export register is one report — not a filter over a mixed series. When a refund query arrives, invoice, shipping bill and return already agree, because they were never separate stories.
Frequently asked questions
Is GST charged on export invoices?
Exports are zero-rated: the foreign buyer pays no Indian GST either way. Under an LUT the invoice carries no IGST; without one, IGST is paid and refunded after export. Input credits stay available on both routes — the choice mainly affects cash flow and paperwork. Confirm your route with your CA.
What is a Letter of Undertaking (LUT)?
A declaration filed with the GST authorities, valid for the financial year, undertaking to complete exports per the rules. It lets you invoice exports without paying IGST — the invoice states it is issued under LUT — removing the pay-first, refund-later cycle. Most regular exporters renew it annually.
What extra fields does an export invoice carry?
The LUT or IGST-paid endorsement, the foreign buyer's address and destination country, no buyer GSTIN, currency and shipping details, 8-digit HSN codes by convention, and shipping bill references that connect the invoice to customs clearance and refunds.
Can I invoice exports in foreign currency?
Commercially yes — the invoice states the contract currency for the buyer and the bank, while GST reporting uses INR. Export-aware billing software keeps both values on one document, converted consistently.
Why keep export invoices in a separate series?
Returns, refunds and audits all ask for exports separately, and export documents behave differently — endorsements, suppressed GST, currency, shipping fields. A distinct document type and series (EST/EIN alongside domestic IN/NIN) gives each requirement a clean answer and stops template errors.