Two options for 0% GST on exports
As a freelancer exporting services, you have two options to avail 0% GST: (1) File for LUT (Letter of Undertaking) and charge 0% GST from the start, or (2) Export with 18% GST and then claim a refund from the government.
Option 1: File LUT (Recommended)
Filing for LUT is the recommended approach. After filing it, you do not have to charge GST on export of services. The LUT is valid for one financial year and needs to be renewed annually. You can file it on the GST portal under Services > User Services > Furnish Letter of Undertaking.
Option 2: Export with GST and claim refund
This option requires you to charge 18% GST to your foreign client (which they won't appreciate), pay it to the government, and then file for a refund. The refund process can take 30-60 days and involves additional paperwork.
Warning: Penalty for non-compliance
If you are exporting services without LUT and without charging GST, you are technically in violation. Not doing so AND getting caught may result in payment of 100% penalty and you will also have to pay due tax. However, the government is not penalizing small service providers yet, so you should be good for now — but get your LUT filed as soon as possible.
Important: Keep your e-FIRCs
Do not forget to take e-FIRCs (electronic Foreign Inward Remittance Certificates) from your bank or payment platform. They are a necessary proof to show that you are engaged in export of services and qualify for 0% GST treatment.