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Exporting Services But Importing Trouble? – Why Ignoring GST for Foreign Clients Can Cost You Big Time!

May 23, 2025
12:49 pm

Exporting Services but Importing Trouble? – Why Ignoring GST for Foreign Clients Can Cost You Big Time!

I thought earning in dollars made me rich… until the tax notice came.

Sounds dramatic? It’s not. For thousands of Indian freelancers, consultants, and agencies working with foreign clients, this isn’t a plot twist—it’s a painful reality.

If you’re offering services outside India and ignoring GST compliance, you’re sitting on a ticking time bomb.

Meet Rhea, a talented UI/UX designer from Mumbai. She had just landed a dream project with a Canadian tech firm. Payments in USD, flexible timelines—life was good.

She believed since the client was international, and payment was in foreign currency; there was no need to worry about GST.

Months went by. Then, came the notice.
She hadn’t filed her GST returns properly. Worse—her foreign income was treated as taxable domestic revenue. No input tax credit. Penalty. Endless paperwork.

Her dream project turned into a compliance nightmare.

Rhea isn’t alone. Across India, service providers working with foreign clients make the same costly assumptions:

Foreign client = No GST❌
Freelancer = No rules apply❌
Small business = No compliance burden❌

The truth is:

Even export of services needs proper GST documentation and filing.

If you don’t classify it as export and fail to submit a Letter of Undertaking (LUT), you may:

Lose your zero-rated GST benefit
Be liable to pay 18% GST
Miss out on input tax credit refunds
Attract notices, penalties, and audits

Here’s you never learned in business school:

Export of Services under GST = 0% GST + Refunds + Peace of Mind

If you’re offering services to clients outside India and receiving money in foreign currency, your services qualify as export under GST.

But… ONLY IF:
✅ You file an LUT
✅ You submit the right GST returns
✅ You document everything properly

When you do this:

You don’t charge GST on your invoice
You claim refunds for input tax
You stay 100% compliant
You boost profitability without hidden tax burdens

Sounds simple? With Legal Suvidha, it actually is.

Legal Suvidha is your GST genie, especially when it comes to services outside India.

We help businesses, freelancers, and consultants:
🔹 Classify services as export
🔹 File LUT without hassle
🔹 Manage GST returns on time
🔹 Claim eligible GST refunds
🔹 Avoid errors that lead to tax troubles

You just focus on serving your global clients—we’ll handle your taxes like clockwork.