For most cross-border services, the place of supply is the location of the recipient, so a service billed to a client based abroad usually has its place of supply outside India. That matters because "place of supply outside India" is one of the five conditions in Section 2(6) of the IGST Act that must all be met for a supply to count as an export of services. A handful of special rules can pull the place of supply back into India, and those are where exporters get caught.
Key takeaways
- Place of supply decides whether a service is an export for GST, and therefore whether it can be zero-rated.
- General rule for cross-border services: location of the recipient.
- Special rules apply to services tied to goods, immovable property, events, intermediaries and a few others.
- Getting place of supply wrong can turn a "zero-rated export" into a taxable domestic supply.
- The EDF is a FEMA filing and does not decide your GST place of supply.
Why place of supply is the hinge
Export of services is a zero-rated supply under Section 16 of the IGST Act. To qualify, Section 2(6) requires all five of these:
| Condition | Plain-English check |
|---|---|
| Supplier is located in India | Your business is in India |
| Recipient is located outside India | Your client is abroad |
| Place of supply is outside India | The rules point outside India for this service |
| Payment in convertible foreign exchange (or INR where RBI permits) | Money comes in as permitted |
| Not merely establishments of a distinct person | You are not billing your own branch abroad |
The first two feel obvious, and payment is visible in your bank statement. Place of supply is the condition people assume rather than check. If it lands in India, the supply is not an export, whatever your invoice says.
The general rule
For services where the supplier or the recipient is outside India, the IGST Act has a separate set of place-of-supply rules (Section 13). Under the general rule, the place of supply is the location of the recipient of services. If the recipient's location is not available in the ordinary course of business, it falls back to the location of the supplier.
So for most remote services, such as software development, design, consulting, writing, marketing, support or research delivered online to a foreign business, the place of supply follows the client and is outside India.
What "location of the recipient" means
It is generally the place of business or fixed establishment where the client receives the supply. A US company contracting with you from its US office is located in the US. Problems start when the "client" is actually an Indian branch, an Indian subsidiary, or a person physically in India receiving the service.
The special cases to watch
The IGST Act carves out specific situations. At a high level:
| Type of service | Where place of supply tends to point | Why exporters should care |
|---|---|---|
| Services on goods physically made available by the recipient | Where the services are actually performed | Repair, testing or treatment of goods in India may stay in India |
| Services needing the recipient's physical presence | Where performed | In-person training or services delivered in India |
| Services tied to immovable property | Where the property is | Architecture or interior work for a site in India |
| Event-related services | Where the event is held | Conferences or exhibitions in India |
| Intermediary services | Location of the supplier | Agents arranging supplies for foreign principals |
| Certain transport and banking-type services | Location of the supplier | Specific categories, check the text |
This table is a simplified map, not a substitute for the statute. Each rule has conditions and exceptions, and some have been interpreted differently by different authorities. When your service falls anywhere near these categories, ask your CA to confirm before you invoice.
Intermediary services deserve extra attention
If you act as an agent or broker, arranging or facilitating a supply between your foreign principal and someone else, the place of supply is your own location, which means India. That supply is not an export, and IGST may apply. This catches some sourcing agents, marketing representatives and referral arrangements. Our article on intermediary services and GST explains the line between providing a service on your own account and acting as an intermediary.
Three worked examples
Example 1: a clean export. Lotus UX Studio LLP in Kochi designs app screens for a Singapore company, delivered online, invoiced at SGD 8,000 and paid by wire. The recipient is in Singapore, place of supply follows the recipient, and the other conditions are met. The supply can be zero-rated under LUT.
Example 2: physical presence in India. Bharat Skills Academy runs a three-day workshop in Bengaluru for staff of a UK firm who fly in. Because the service needs the recipients' physical presence and is performed in India, the place of supply is likely India. Even though a UK company pays in GBP, this may not be an export of services.
Example 3: an agent. Indus Sourcing Partners finds Indian manufacturers for a German buyer and earns a commission from the buyer. That looks like an intermediary service; place of supply is India, so IGST may be payable despite the foreign currency receipt.
These are illustrations. Real contracts have details that change the answer.
How this connects to your EDF
The EDF is a declaration under FEMA. It records your service export for RBI and your bank, and it does not change your GST or income-tax position. You might still file an EDF for a receipt that GST treats as a domestic supply, because the foreign exchange rules and GST rules ask different questions. Keep the two analyses separate, but make sure your invoice, your SAC code and your EDF description tell a consistent story.
Before raising an export invoice, run through this quick check:
- Who exactly is the recipient, and where is their business established?
- Is the service performed on goods or for people physically in India?
- Is it linked to property or an event in India?
- Am I supplying on my own account or arranging something between others?
- Will payment arrive in convertible foreign exchange?
If all answers point abroad, use our export invoice generator with the LUT wording. For the remaining conditions, see our explainer on the five conditions in Section 2(6). This is general information, not legal or tax advice.
Frequently asked questions
What is the place of supply for export of services?
For most cross-border services, the place of supply is the location of the recipient. If your client is a business established abroad and receives the service there, the place of supply is outside India, which is one of the conditions for treating the supply as an export.
Can a service paid in dollars still be taxed in India?
Yes. Payment in foreign currency is only one of the five export conditions. If the place of supply is India, for example because the service is performed on people or goods in India or is an intermediary service, the supply may be taxable even though you were paid in dollars.
Are intermediary services treated as exports?
Generally no. For intermediary services, the place of supply is the location of the supplier, which is India for an Indian intermediary. Because the place of supply is not outside India, the supply usually does not meet the export conditions.
Does the EDF decide whether my supply is an export for GST?
No. The EDF is a FEMA declaration to your bank and does not change GST or income-tax obligations. GST export status depends on the IGST Act conditions, including place of supply, which you should check separately.
What should I mention on the invoice to show place of supply?
Show the recipient's full foreign address and country, and the place of supply as outside India where that applies. If you export under LUT, include the wording "Supply meant for export under LUT without payment of IGST".
Bottom line
Check place of supply before you invoice, not after a GST query arrives. When the answer points outside India, raise a compliant invoice with our export invoice tool and declare it on that month's 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.