Export of services from India: LUT, GST refund, and FIRC

An Indian business billing foreign clients is exporting services under GST rules. The compliance loop has three moving parts: filing a Letter of Undertaking (LUT), claiming refund of accumulated input tax credit (ITC), and producing Foreign Inward Remittance Certificates (FIRCs) as proof of receipt. Each part is straightforward in isolation. The coordination across all three is where most exporters stumble.

LUT — Letter of Undertaking

An LUT lets an exporter raise zero-rated invoices without paying IGST upfront. Without it, every export invoice pays IGST that has to be claimed back via refund — a multi-month process. LUT is filed annually on the GST portal, usually in March or April for the upcoming fiscal year. It is free, takes 30 minutes, and saves months of refund friction.

ITC refund

Exporters accumulate ITC on inputs (vendor invoices with GST) that they cannot offset against output tax because their output is zero-rated. The accumulated ITC is claimable as a refund under Section 54 of the CGST Act. Refund applications are filed on the GST portal with supporting documentation — invoices, bank realization certificates, and the BRC/FIRC for the export receipts.

FIRC — Foreign Inward Remittance Certificate

FIRC is the bank's certification that foreign currency was received by the exporter. It is the documentary proof of export realization required for GST refund and for income tax purposes. Issued by the bank that received the wire, typically within 7 days of receipt — but only if requested. Banks do not auto-issue FIRCs; the exporter has to ask.

The coordination loop

1. 1File LUT for the fiscal year before the first export invoice goes out.
2. 2Raise zero-rated export invoices under LUT.
3. 3When payment is received, request FIRC from the receiving bank.
4. 4Accumulate FIRCs across the refund period (usually a quarter).
5. 5File the ITC refund application with FIRCs and invoice support.
6. 6Track the refund through the GST portal — typical processing is 60–90 days.

Companies that handle the loop cleanly recover ITC on schedule and treat it as predictable working capital. Companies that miss steps — most often the FIRC request — accumulate ITC for years before realizing it is recoverable.