Zero-Rated Supply
A zero-rated supply is a sale — such as an export of services — on which GST is charged at 0%, while the seller can still claim input tax credit on related expenses.
Zero-rated supplies are different from GST-exempt supplies. On a zero-rated supply, GST is technically charged at 0% rather than not applying at all — which means the seller can still claim input tax credit on the expenses used to make that supply, unlike a fully exempt sale.
The most common zero-rated supply for Indian freelancers is the export of services — invoicing a client based outside India. As long as payment is received in convertible foreign exchange and other export conditions are met, this qualifies as zero-rated.
Filing an LUT (Letter of Undertaking) lets you invoice these zero-rated exports without paying IGST upfront and claiming it back later.
Written by the InvoicePilot Team.