You’ve landed a client in the US, UAE, or UK. Now they’re asking for an invoice — and suddenly you’re not sure what currency to use, whether to charge GST, or what “FEMA compliance” actually means for a freelancer or small agency.
This guide covers everything you need to know about invoicing foreign clients from India, without the jargon.
Do You Charge GST on a Foreign Invoice?
In most cases: No.
Services exported from India are treated as zero-rated supply under the GST Act. This means GST applies at 0% — you don’t charge it, and you don’t collect it from your foreign client.
The logic: GST is a destination-based tax. When your service is consumed outside India, India doesn’t get to tax it.
The Condition: What Makes a Service an “Export”?
Under Section 2(6) of the IGST Act, a supply qualifies as export of services if all five of the following are true:
- The supplier is located in India
- The recipient is located outside India
- The place of supply is outside India
- Payment is received in convertible foreign exchange (USD, EUR, GBP, AED, etc.)
- The supplier and recipient are not just different establishments of the same entity
If your foreign client pays you in Indian Rupees via a local Indian account, it may not qualify as an export of services. Always receive payment in foreign currency to a proper forex account.
What Goes on the Invoice?
A compliant invoice for a foreign client from an Indian GST-registered business should include:
| Field | What to Write |
|---|---|
| Your name and address | Your Indian registered address |
| Your GSTIN | Your GST registration number |
| Your PAN | Recommended for remittance purposes |
| Invoice number | Sequential, as usual |
| Invoice date | Date of raising the invoice |
| Client name and address | Full foreign address |
| Description of services | Clear description + SAC code |
| Currency | USD / EUR / GBP / AED — whichever you agree on |
| Amount | In agreed foreign currency |
| GST | Write “Nil — Export of Services (Zero Rated Supply)” or simply leave GST line at 0% |
| Place of supply | The country of your client |
| LUT/Bond reference | Your LUT number if you have one (see below) |
What is an LUT? Do You Need One?
LUT stands for Letter of Undertaking. It’s a declaration you file with the GST department, saying you commit to exporting services without collecting IGST, and will comply with all export conditions.
If you have an LUT: You export without paying any GST. Your invoice shows zero tax.
If you don’t have an LUT: You can still export services, but you’d need to pay IGST first and then claim a refund — which is cumbersome and delays your cash flow.
Filing an LUT is free, done online via the GST portal, and valid for a full financial year. If you regularly invoice foreign clients, file it once at the start of each financial year. It takes about 15–20 minutes.
Which Currency Should You Invoice In?
Use whatever currency your client prefers and you’ve agreed on — typically USD for US clients, EUR for European clients, AED for UAE clients, GBP for UK clients.
The rupee equivalent for your books is calculated at the exchange rate on the date of the invoice (or the date of receipt — your accountant will advise based on your accounting method).
A few practical points:
- Invoicing in USD protects you if your client is more comfortable with their home currency
- The exchange rate at payment time is what matters for your tax computation — not the rate when you raised the invoice
- Keep records of both the foreign currency amount and the INR equivalent received
FEMA Compliance: What It Means for Freelancers
FEMA stands for the Foreign Exchange Management Act. For freelancers and small businesses, FEMA compliance basically means three things:
1. Receive Payment Through Proper Channels
Foreign payments must come through a bank account, not cash or crypto. Wire transfer, SWIFT payment, or platforms like Payoneer or Wise that convert and deposit to your Indian bank account are all acceptable. Payment apps that bypass the banking system are not.
2. Repatriate the Money
Once you receive foreign currency, you must bring it into India within a reasonable time — typically within 9 months of the invoice date. You cannot indefinitely keep funds in a foreign account (unless you have a specific permission for that).
3. FIRC — Foreign Inward Remittance Certificate
Your bank issues an FIRC (or eBRC — Electronic Bank Realisation Certificate) for each foreign payment you receive. This is your proof that you received legitimate foreign exchange. Keep these — your CA will ask for them at year end, and they’re required if you’re claiming export benefits or responding to a GST audit.
For most freelancers earning below ₹50 lakh, FEMA compliance is simply: use a proper bank, keep your FIRC documents, and file your taxes correctly. You don’t need any special registration or approval.
Common Mistakes to Avoid
Charging 18% GST on a foreign invoice. This is the most common mistake. Your foreign client has no way to claim Indian ITC, so you’re just overcharging them with a tax that will need to be refunded. Export of services is zero-rated — don’t add GST.
Not mentioning “Export of Services” on the invoice. Always state clearly that this is zero-rated export of services. It protects you in an audit.
Invoicing in INR to a foreign client. Technically possible, but then the foreign exchange condition for export of services may not be met. Stick to the agreed foreign currency.
Not collecting FIRC documents. Your bank may issue these automatically or you may need to request them. Ask your bank how their process works and keep a folder for these.
Not filing an LUT annually. Many businesses file it once and forget to renew. LUTs are valid for one financial year only (April to March). File a fresh one each April.
Summary
| Question | Answer |
|---|---|
| Do I charge GST on foreign client invoices? | No — it’s zero-rated export of services |
| Do I need to be GST registered to export services? | Yes, if your turnover exceeds the registration threshold |
| What currency should I invoice in? | The foreign currency agreed with the client (USD, EUR, GBP, AED, etc.) |
| What is an LUT and do I need one? | Yes — file it free on the GST portal at the start of each financial year |
| What is an FIRC? | Proof of foreign payment received — issued by your bank, keep all of them |
| Is Payoneer / Wise acceptable? | Generally yes — as long as the money lands in your Indian bank account |
Invoicing System supports foreign currency invoicing for Indian businesses — switch to USD, EUR, GBP, or AED per client, and GST is automatically set to zero for foreign clients. Your invoice shows the currency your client expects, while your records keep the rupee equivalent. Try it free →