Is billing in foreign currency enough to make it an export?

No. Receipt in convertible foreign exchange is one of five conditions, not the test itself. A supply can be paid entirely in dollars by a client with no Indian presence and still fail to be an export — most commonly because supplier and recipient are establishments of the same person, or because the place of supply falls in India under one of the specific rules.

What is the establishment condition?

Export treatment is denied where the supplier and the recipient are merely two establishments of the same person — an Indian branch and its overseas head office, for example. It turns on legal identity rather than closeness of relationship. A subsidiary and its foreign parent are two persons and can transact as exporter and importer; a branch and its own head office are one person and cannot.

Should we export under a letter of undertaking or pay IGST and claim refund?

Under a letter of undertaking, in almost every case. It lets you export without paying tax, so no working capital is locked up. The alternative — paying IGST and reclaiming it — ties up cash for the length of the refund cycle for no benefit. The main reason businesses end up on the paying route is that they did not have a valid letter of undertaking in place when the exports happened.

When do we need to file the letter of undertaking?

It is filed for a financial year and must be in place before the exports it covers. It does not apply retrospectively to exports already made, so a lapse between years is not a formality — exports made in the gap can be treated as having required payment of IGST. Renewal at the start of each financial year is the single cheapest control in this area.

We are within the turnover threshold. Do we need to register at all?

Export of services is a zero-rated supply, not an exempt one, so it counts towards aggregate turnover and can require registration. Registration is also a practical necessity if you want to zero-rate under a letter of undertaking or claim refund of input credit — neither is available without it. Concluding you are below the threshold because no tax is payable confuses zero-rated with exempt.

Export of Services Under GST: The Five Conditions

Short answer: five conditions, and all five must hold. Supplier in India, recipient outside India, place of supply outside India, payment in convertible foreign exchange, and supplier and recipient not establishments of the same person. Fail one and the entire supply is domestic and taxable.

The five conditions

#	Condition	Where it usually fails
1	Supplier located in India	Rarely an issue
2	Recipient located outside India	Where the contracting party differs from who actually receives the benefit
3	Place of supply outside India	The specific place-of-supply rules that override the default
4	Payment in convertible foreign exchange (or INR where permitted)	Documentation, or receipt through an Indian intermediary account
5	Supplier and recipient not merely establishments of the same person	Branch and head office structures

The common misconception is that this is really a one-condition test — foreign client, foreign currency, done. It is not, and the two that most often defeat otherwise genuine exports are three and five.

Condition 3: place of supply

The default for a service to a foreign recipient is the recipient's location, which puts it outside India and satisfies the condition.

But there are specific rules that override the default, and where one applies the place of supply can land in India even though the client is abroad. The categories to check:

Services performed on goods physically made available by the recipient.
Services requiring physical presence of the recipient or their representative.
Services relating to immovable property located in India.
Admission to, or organisation of, events held in India.

Each of those can put the place of supply in India regardless of who is paying or from where.

The largest of these overrides — the intermediary rule — has now been removed. Section 13(8)(b) was omitted with effect from 30 March 2026, so intermediary services to overseas recipients no longer have their place of supply forced to India. That change is significant enough to have its own note: the intermediary trap is gone.

Condition 5: the establishment test

The one people find least intuitive, because it does not depend on anything commercial.

Export treatment is denied where the supplier and recipient are merely two establishments of the same person. The test is legal identity:

Indian branch → its own overseas head office. One person. Not an export, no matter how the invoicing is arranged or in what currency.
Indian subsidiary → its foreign parent. Two persons. Can be an export, subject to the other conditions.

For a captive operation set up to serve a foreign group, this is the condition that decides everything, and it is decided by how the entity was structured — often years earlier, for reasons that had nothing to do with GST.

Zero-rated is not exempt

A distinction that costs people their registration position.

Exempt supplies carry no tax and no credit. Zero-rated supplies carry no tax but preserve the credit — that is the entire point, and it is what makes input credit on exports refundable.

Two consequences follow:

Export turnover counts towards aggregate turnover and can require registration.
Concluding "no tax is payable, so we need not register" confuses the two, and forfeits both zero-rating under a letter of undertaking and any refund.

Letter of undertaking, or pay and reclaim

Two routes to zero-rate:

Under a letter of undertaking — export without paying IGST. No cash goes out. This is the right answer in almost every case.

Pay IGST and claim refund — charge the tax, pay it, reclaim it. Working capital is locked up for the refund cycle, for no corresponding benefit.

Businesses generally end up on the second route by accident, not choice — because no valid letter of undertaking was in place when the exports happened.

The mechanics that matter:

It is filed for a financial year.
It must be in place before the exports it covers.
It does not apply retrospectively. A gap between one year's expiry and the next year's filing is a real exposure for exports made in that window.

Renewing at the start of each financial year is the cheapest control in this area, and forgetting it is among the most common and most avoidable errors.

What to hold on file

Contracts identifying the overseas recipient clearly, and matching who actually receives the service.
Invoices with the required export particulars and the letter of undertaking reference.
Evidence of receipt in convertible foreign exchange.
Documentation of the group structure, where the client is a related entity — because condition five will be asked about.

Once the position is established, the input credit becomes refundable — see the refund file.

Meeting the conditions is the first half. The second is being paid, and evidencing it — the refund turns on realisation, and the FEMA clock behind it changes on 1 October 2026. See realisation, FIRC and the GST refund.

This is a working reference, not the statute. For anything you are relying on, confirm the section and rule text directly.

Export of services: five conditions, all of which have to hold