If you're a Surat IT company exporting services to international clients, understanding GST and FEMA compliance isn't optional — it's the difference between keeping your foreign earnings and getting penalized for them.
The most important concept: IT service exports are zero-rated under GST. This means you don't charge GST to international clients. But zero-rated doesn't mean exempt — you still need to file returns and claim refunds on input tax credits (ITC) you've paid domestically.
Letter of Undertaking (LUT): this is the document that allows you to export without paying IGST upfront and then claiming a refund. Without a valid LUT, you're either paying 18% IGST on every invoice (and waiting for refunds) or violating GST rules. File your LUT annually — it's a simple online process on the GST portal.
Bank Realization Certificate (BRC/FIRC): every time a foreign client pays you, your bank issues an inward remittance certificate. Keep these. They prove export income. You'll need them for GST refund claims, income tax assessments, and any future due diligence.
FEMA compliance: all foreign payments must come through authorised dealer banks (your regular business bank account qualifies). Payments must be received within 15 months of invoice date for service exports. Delays beyond this require RBI approval — don't let outstanding invoices sit.
Common mistakes SIC members have flagged: (1) Not mentioning "Export of Services" and GSTIN on invoices. (2) Receiving payments in personal accounts instead of business accounts. (3) Not filing LUT before the financial year begins. (4) Missing ITC refund deadlines — you have 2 years.
The practical advice: get a CA who specifically handles IT export companies. General practice CAs often miss IT-specific nuances. Several SIC members offer referrals to CA firms that specialize in this — reach out through the community.
"Without a valid LUT, you're either paying 18% IGST upfront on every invoice or violating GST rules. File it annually — it takes 15 minutes."
