A foreign currency invoice to an overseas client is judged by two separate laws at the same time. GST decides whether it qualifies as a zero-rated export and what the invoice must say; FEMA decides how you declare it on the EDF and how fast the money must come in. Get one invoice right for both and you avoid most of the reconciliation headaches exporters face at year end.
Key takeaways
- GST: export of services is zero-rated under Section 16 of the IGST Act if the five Section 2(6) conditions are met, including payment in convertible foreign exchange (or INR where RBI permits).
- FEMA: every service export invoice goes on an EDF within 30 days from the end of the invoice month, and must be realised within 9 months (12 months for rupee invoices).
- Under LUT, the invoice should carry "Supply meant for export under LUT without payment of IGST".
- The SAC code, invoice number, date, currency and amount should be identical on your invoice, your GST return and your EDF.
- Exchange-rate conversion may follow different conventions for GST and for the EDF. Pick documented methods and apply them consistently.
The two laws side by side
| Question | GST (IGST Act and rules) | FEMA (2026 export regulations) |
|---|---|---|
| What makes it an export? | Five conditions in Section 2(6): supplier in India, recipient abroad, place of supply abroad, payment in convertible foreign exchange or permitted INR, not merely establishments of a distinct person | Service supplied by an Indian exporter to a recipient abroad, declared on the EDF |
| Tax on the invoice | Zero-rated: no IGST under LUT, or IGST paid and refunded | Not a tax law; no tax on the EDF |
| Invoice wording | LUT wording if exporting without IGST | No specific wording, but the invoice must match the EDF row |
| Currency | Foreign currency (or INR where RBI permits) | Any currency; recorded per row in Part 2B |
| Rupee conversion | Your CA will advise on the rate convention for GST | Field 1.22 total value in INR; use a consistent, documented rate |
| Deadline | Report in your GST return for the period | EDF within 30 days from the end of the invoice month |
| Proof of payment | Needed to support the export conditions and refunds | Needed to close the EDPMS entry (above ₹10 lakh: invoice, payment evidence, matching instructions) |
| Time to collect | Linked to export status; ask your CA about consequences of non-receipt | 9 months from invoice date (12 for INR); bank can extend |
This is general information, not legal or tax advice. Where the two laws use different conventions, your CA's view governs the GST side and your AD bank's policy governs the FEMA side.
What the invoice itself must carry
A single foreign currency invoice can satisfy both laws if it includes:
- your legal name, address, GSTIN and PAN;
- a unique, consecutive invoice number and the invoice date;
- the client's legal name, address and country;
- a clear description of the service and the SAC code;
- the amount in the agreed foreign currency;
- the LUT wording, if exporting under LUT;
- payment terms and bank details (SWIFT, account, any intermediary instructions);
- optionally, the rupee equivalent at your chosen rate, if your CA advises showing it.
The export invoice generator includes all these fields and adds the LUT wording automatically.
The exchange-rate question
This is where exporters most often get tangled. You may need rupee values in three places: your books, your GST return and EDF field 1.22.
There is no single rate that every bank and every CA uses for every purpose. What you can do:
- Ask your CA which rate convention to use for GST reporting and accounts.
- Ask your AD bank whether it expects a particular basis for the EDF rupee total.
- Write both down in a one-page policy and apply them every month.
What matters most is consistency and documentation. A total that differs between your EDF and your GST return because of a known rate difference is easy to explain; one that differs because someone used a different rate each month is not. Our article on the exchange rate for the EDF total value covers the FEMA side.
Worked example: one invoice, two laws
Quillstack Technologies Pvt Ltd invoices Larchmont Health Inc, USA, USD 15,000 on 9 December 2026 for software implementation, under LUT.
GST side: - Invoice carries SAC 998314 and "Supply meant for export under LUT without payment of IGST". - IGST: nil. - Reported as export of services in the December GST return. - Payment in USD supports the Section 2(6) payment condition.
FEMA side: - One row on the December EDF, due 30 January 2027: Larchmont Health Inc, USA, invoice number, 09-12-2026, USD, 15,000, NRV, description, SAC 998314, contract reference. - Field 1.22 includes the rupee value at Quillstack's documented EDF rate, about ₹12,60,000. - Must be realised by 9 September 2027. - Above ₹10 lakh, so closure needs invoice, FIRA and matching instructions.
Payment: USD 14,975 arrives on 20 January 2027, after USD 25 in charges abroad. The FIRA shows purpose code P0802. Quillstack explains the USD 25 difference as bank charges when sending matching instructions.
Reconciliation: the invoice number, date, SAC and USD amount are identical in the invoice, GST return and EDF. The rupee values differ slightly because of different rate conventions, which Quillstack's policy note explains.
Where the two laws can pull apart
Rupee invoicing. FEMA gives 12 months to realise INR invoices; GST allows INR payment only where RBI permits it. Do not switch a foreign client to INR invoicing without checking both.
Third-party payers. If someone other than your client pays, FEMA wants it reflected on the EDF (fields 1.15–1.16), and your CA may want to look at the GST position too.
Credit notes. A discount after invoicing changes your GST reporting and the amount realisable on the EDF. Handle both together; see our piece on credit notes and short payments.
Non-payment. If the money never arrives, FEMA leaves an open EDPMS entry and GST export status may be questioned. Talk to your bank and CA early.
Frequently asked questions
Can I raise a GST export invoice in US dollars?
Yes. Export invoices are commonly raised in the foreign currency agreed with the client. Include your GSTIN, SAC code and, if under LUT, the LUT wording. Ask your CA whether you should also show the rupee equivalent.
Which exchange rate should I use on a foreign currency invoice?
Use the convention your CA advises for GST and accounts, and the basis your AD bank expects for the EDF rupee total. Document both and apply them consistently every month.
Does a foreign currency invoice need to be on the EDF?
Yes, if it is a service export by a business covered by the 2026 regulations. List it as a row in Part 2B of the EDF for the month of the invoice date.
What if the client pays slightly less because of bank charges?
Declare the full invoice amount on the EDF, reflect known deductions in the net realisable value as your bank prefers, and explain the difference with the FIRA when closing the entry.
Do GST and the EDF have the same deadlines?
No. The EDF is due within 30 days from the end of the invoice month. GST returns follow their own schedule; check the GST portal or ask your CA for your dates.
Bottom line
One well-built foreign currency invoice can satisfy GST and FEMA together, provided the same data flows into both. Create yours with the free export invoice generator and declare it on your monthly EDF.
This guide is general information for Indian businesses, not legal or tax advice. Rules and bank processes change — confirm specifics with your AD bank or chartered accountant.