Every IT and software service supplied in India carries GST at 18%. There is no concessional rate for the sector and no composition scheme, whatever a consultant tells you. Custom development, SaaS subscriptions, AMC contracts, consulting and support all sit at the same rate, classified under SAC codes in the 9983 family — 998314 for software development and SaaS platforms, 998313 for IT consulting and support, 998315 for hosting and cloud infrastructure. If your turnover crosses five crore rupees you must use the full six-digit code on every invoice, and it is worth doing from the start regardless.
Exports are different. Under Section 16 of the IGST Act an export of services is zero-rated, meaning you charge no GST and still keep your input tax credit. But zero-rating is conditional, and all five conditions must hold: the supplier is in India, the recipient is outside India, the place of supply is outside India, payment arrives in convertible foreign exchange or permitted rupees, and the supplier and recipient are not two establishments of the same person. That last condition is where Indian subsidiaries billing a foreign parent most often come unstuck, and it is not a technicality — fail it and the invoice becomes a domestic supply at 18%.
To invoice without charging GST you need a Letter of Undertaking. It is filed as Form GST RFD-11, it is valid for one financial year, and it needs renewing before the new year starts. Most exporters need no bond or bank guarantee. Without a valid LUT you must charge 18% IGST on export invoices and claim it back afterwards through a refund — which works, but parks your cash with the government for months. Filing the LUT on time is the single cheapest piece of tax hygiene an export-focused firm can do.
There is a deadline on the money too. Export proceeds must arrive within one year of the invoice date. Miss it and the supply stops being zero-rated: 18% IGST becomes payable, with interest. For firms working with a small number of large overseas clients on long payment cycles, this is worth tracking as a real operational risk rather than something the accountant will notice eventually. Accumulated input credit from zero-rated supplies is refundable via Form RFD-01, typically processed within about sixty days.
The significant change this year concerns intermediary services. Section 13(8)(b) of the IGST Act used to deem the place of supply for an intermediary to be the location of the supplier — which meant an Indian company facilitating a transaction between two foreign parties was treated as making a domestic supply, could not claim export status, and could not get its accumulated input credit refunded. It generated years of litigation and caught IT and ITES companies, BPO units, global capability centres and marketing support entities who were, by any commercial reading, exporting.
The Finance Act 2026 omitted that clause. Because Section 157 of the Act carried no separate commencement provision, the omission took effect on Presidential assent — 30 March 2026. Intermediary services now fall back to the default rule in Section 13(2), where the place of supply is the recipient's location. If your work was previously classified as intermediary, it can now qualify for zero-rating and the input credit refund that goes with it. The change cuts both ways: where a foreign intermediary supplies an Indian client, reverse charge obligations now land on the Indian recipient.
None of this is exotic, but it is the kind of detail that decides whether an export-led software business runs on its own cash or on borrowed working capital. If you are building a product or a services practice aimed at overseas clients, get the LUT filed, get the classification of your services examined properly in light of the March change, and keep the foreign-exchange realisation clock visible to whoever runs the business rather than only to whoever files the returns.
