For Indian SaaS start-ups and software exporters, understanding GST on cross-border transactions is crucial.
Mistakes in place-of-supply, LUT filing, and zero-rated supply treatment can lead to tax liabilities, loss of refunds, or scrutiny notices.
This blog explains how GST applies to cross-border SaaS exports in 2025, how to determine place-of-supply, and the steps to file a Letter of Undertaking (LUT) properly.
Legal Reference
- Section 2(6), 2(13), 13(12), 16, IGST Act, 2017
- Rule 96A, CGST Rules
- CBIC Notifications relevant for export of services
When is SaaS Export Treated as Zero-Rated?
To qualify your SaaS revenue as zero-rated supply (eligible for GST exemption):
- Supplier must be located in India
- Recipient must be located outside India
- Service must be used outside India
- Payment must be received in convertible foreign exchange or in INR wherever permitted by RBI
- Supplier and recipient should not merely be branches of the same legal entity
If these conditions are met, SaaS revenue is treated as export of services.
Place-of-Supply Rules for Cross-Border SaaS
- If recipient is outside India ➔ Place of supply is outside India
- No GST needs to be charged on invoices if LUT is filed
- If recipient is in India ➔ GST applicable even if payment is in foreign currency
Filing Letter of Undertaking (LUT): Step-by-Step Guide
An LUT allows you to export without charging IGST.
Step 1: Log in to GST portal ➔ Select “Services” ➔ “User Services” ➔ “Furnish LUT”
Step 2: Choose Financial Year
Step 3: Upload previous LUT (if applicable) and fill basic details
Step 4: Sign the form with DSC/EVC
Step 5: Save acknowledgement for future reference
Timeline: LUT must be filed before starting exports every financial year.
Example: SaaS Export Without Charging IGST
Company XYZ:
- Provides CRM SaaS to a US client
- Receives USD 10,000 per month
- Filed LUT on 1st April 2025
✅ No GST charged on invoice
✅ Treats service as zero-rated export
✅ Eligible to claim input tax credit refund (if needed)
Key Compliance Tips for Cross-Border SaaS
- Always file LUT at the start of financial year
- Raise export invoices without GST but with LUT reference
- Maintain bank advice/foreign inward remittance certificates for each receipt
- Match export turnover reported in GSTR-1 and GSTR-3B accurately
- Apply for refund of unutilized input credit if desired (optional)
Risks of Non-Compliance
- Charging GST incorrectly to foreign customers
- Loss of refund claims due to procedural mistakes
- GST audits questioning place-of-supply classification
- Interest liability if IGST incorrectly collected but not paid
Conclusion
For Indian SaaS exporters, getting GST treatment right is critical for maintaining cash flow, pricing competitiveness, and regulatory compliance. Filing LUT on time and documenting foreign receipts ensures that you can run global SaaS operations without GST disruptions.
Call to Action and Disclaimer
Need help setting up GST compliance or filing LUT for SaaS exports?
Schedule a meeting with our Chartered Accountant, Anshul Goyal, by visiting:
Disclaimer: I am Anshul Goyal, a Chartered Accountant licensed with ICAI, India. This blog is for general information and not a substitute for personalized tax advice.
Frequently Asked Questions
1. Is GST applicable if I export SaaS to a foreign company?
No, if LUT is filed and payment is received in convertible foreign currency.
2. What if I do not file LUT?
You must charge IGST and then claim refund separately.
3. Can startups claim refund of input GST even without exporting goods?
Yes. Export of services also qualifies for input tax credit refund.
4. Does RBI allow INR payments from foreign clients?
Yes, for specific sectors and countries approved under FEMA guidelines.
5. How often should I file LUT?
Once every financial year, before starting exports for that year.