A client based in Dubai pays in USD to an Indian freelance interior designer for a full redesign of an apartment the client owns in Pune. The foreign address, the foreign currency, the client outside India all read like a textbook export of services. It is not one, and invoicing it as zero-rated under an LUT the way you would for a normal international client is a genuine compliance risk, not a technicality.
Most freelancer content assumes a client based outside India automatically means the transaction is zero-rated. It usually does, but not always, and the exception matters most for exactly the kind of work that sounds international on paper while actually happening on Indian soil.
A foreign client is not enough on its own to be an export
Export of services under Section 2(6) of the IGST Act, 2017 requires five conditions to be true at the same time, not just one: the supplier is located in India, the recipient is located outside India, payment is received in convertible foreign exchange (or INR as RBI permits), the supplier and recipient are not merely branches of the same legal entity, and critically, the place of supply is outside India. A foreign client satisfies the second condition. It says nothing about the fifth, which is where most freelancers assume too much.
For most freelance work, design, development, writing, consulting delivered remotely with no physical component, place of supply does default to the recipient's location under Section 13(2), so a foreign client genuinely does mean an export in the majority of cases. The exception is narrow but real: it applies specifically when the service relates to something physically located in India.
When the place of supply stays in India despite a foreign client
Under Section 13(4) of the IGST Act, services related to immovable property, explicitly including work by architects, interior decorators, and anyone coordinating construction, are treated as supplied where the property itself is located, not where the client is. A foreign client hiring an Indian freelancer for design or consulting tied to a specific property in India falls squarely into this rule, regardless of where the client lives or what currency they pay in.
A related exception applies to services that require the freelancer's physical presence with goods located in India, an on-site equipment inspection, a physical audit, or hands-on training conducted at a foreign company's India facility. Under Section 13(3), place of supply for this kind of service is where it is actually performed, which is India, even though the company paying you is based abroad. The common thread across both exceptions: if the value of the service is genuinely tied to something physical inside India, the client's foreign address does not move the place of supply outside it.
What it actually costs to get this wrong
If you invoice a transaction at 0% under an LUT when the place of supply was actually India, and this gets reclassified on assessment, the supply is treated as a normal taxable transaction. You become liable for GST on the full invoice value, plus interest, plus a possible penalty under Section 122 of the CGST Act. Since the client already paid you without GST added, on the assumption the invoice was correctly zero-rated, this liability typically has to come out of your own pocket rather than being recoverable from the client after the fact. This is not a rare edge case flagged only in theory. It is a recurring, practical risk for freelancers whose work has any physical component tied to a location in India, and one more reason to get your GST registration basics right before international invoicing becomes routine.
The fix is straightforward once you know to look for it: before treating any foreign-client invoice as an export, ask whether the actual work is tied to a specific physical thing or place in India, a property, equipment, an on-site event. If it is, charge GST as you would for a domestic client (typically IGST, since the transaction still crosses state lines from your registered state), not 0% under LUT.
Recent change worth knowing if you were told otherwise
If you learned GST place-of-supply rules before 2026, one specific rule may be outdated for you. Section 13(8)(b), which previously forced place of supply to India for intermediary services (agents or brokers arranging deals on behalf of a foreign client) even when the client was abroad, was omitted by Section 157 of the Finance Act, 2026, effective March 30, 2026. If your work is closer to brokering or arranging deals for a foreign client than to design or on-site services, this specific change may now work in your favor where it previously did not. The immovable-property and physical-presence rules covered above were not affected by this change and remain fully in force.
Rinto's GST calculation on invoices is based on your registered state and the client's billing location, so for any project where the work itself is tied to a specific place in India rather than purely remote delivery, confirm the correct GST treatment yourself before marking the invoice as a zero-rated export, since the invoicing tool cannot know where the actual service was physically performed.
Frequently Asked Questions
Is a service always an export if the client is outside India?
No. A foreign client satisfies only one of five conditions required under Section 2(6) of the IGST Act for a supply to count as an export. The place of supply must also be outside India, which is not automatic. For most remote freelance work, it usually is, but services tied to a specific property or physical location in India, such as interior design or on-site consulting, keep the place of supply in India regardless of where the paying client is based.
When is a freelance service NOT treated as an export even with a foreign client?
Two main cases under the IGST Act. Under Section 13(4), services related to immovable property, including architecture and interior design, are treated as supplied where the property is located, not where the client is. Under Section 13(3), services requiring the freelancer's physical presence with goods in India, such as an on-site audit or training at a foreign company's India facility, are treated as supplied where the service is actually performed.
What happens if I wrongly invoice a service as a zero-rated export?
If reclassified as a domestic supply on assessment, you become liable for GST on the full invoice value, plus interest, plus a possible penalty under Section 122 of the CGST Act. Since the client already paid without GST added, this liability usually has to be absorbed by you rather than recovered from the client afterward, making it a genuine financial risk, not just a paperwork correction.
How do I know if my work counts as tied to a physical location in India?
Ask whether the value of the service is genuinely connected to something physical inside India: a specific property, equipment, or an on-site event or process. Purely remote deliverables like design files, code, written content, or consulting advice delivered over video calls generally do not trigger this exception. Work that requires visiting a site, inspecting physical goods, or is specifically about a property does.
Did anything about export-of-services rules change recently?
Yes. Section 13(8)(b), which previously forced place of supply to India for intermediary services arranged on behalf of a foreign client even when the client was abroad, was removed by the Finance Act, 2026, effective March 30, 2026. This mainly affects agents or brokers facilitating deals for foreign clients. The immovable-property and physical-presence rules covering design and on-site services were not changed by this amendment.