GST on Services to UAE Customers: Export Rules, LUT and 2026 Intermediary Change

Summary: Services supplied by an Indian business to a UAE customer do not automatically qualify as exports merely because the invoice is raised on a foreign entity or payment is received in foreign currency. Under the IGST Act, export treatment depends on satisfaction of all prescribed conditions, including the location of the supplier and recipient, place of supply, receipt of consideration in the permitted manner and the relationship between the establishments. Qualifying exports are zero-rated supplies, and registered exporters may use a Letter of Undertaking to export without payment of IGST and claim eligible unutilised input tax credit, subject to applicable conditions. The place-of-supply analysis is particularly important for consulting, software, advertising, data-hosting, property-related, event and agency services. CBIC Circular Nos. 230/24/2024-GST and 232/26/2024-GST clarify important cross-border advertising and data-hosting situations. A major change occurred in 2026 when the Finance Act, 2026 omitted Section 13(8)(b) of the IGST Act, ending the special supplier-location rule for intermediary services and making the general recipient-location rule relevant to such services from the effective date. Businesses serving UAE customers should therefore ensure that their contracts, invoices, recipient identification, place-of-supply analysis, LUT, foreign-remittance evidence, GST returns and refund records consistently support the export position.

Introduction

An Indian consultant sends an invoice to a Dubai company, receives payment in dollars and assumes that GST does not apply because the customer is outside India.

That conclusion may be correct, but the customer’s UAE address is not enough to establish it.

Under Indian GST law, a service supplied to a foreign customer becomes an export only when all the prescribed conditions are satisfied. The contract, identity of the recipient, place of supply, relationship between the parties and manner of receiving payment must support the export position.

The subject has become even more important following the 2026 amendment concerning intermediary services. Indian agents, commission businesses, sourcing consultants and marketing representatives serving overseas clients need to distinguish the current position from the treatment applicable to earlier transactions.

Foreign Customer Does Not Automatically Mean Export

The Integrated Goods and Services Tax Act, 2017 treats a service as an “export of services” only where all the following conditions are fulfilled:

• The supplier of the service is located in India;
• The recipient of the service is located outside India;
• The place of supply is outside India;
• Payment is received in convertible foreign exchange or in Indian rupees where permitted by the Reserve Bank of India; and
• The supplier and recipient are not merely establishments of the same person treated as distinct persons under the IGST Act.

Failure of any one condition may prevent the supply from qualifying as an export.

For example, an Indian company may invoice a UAE company and receive payment in foreign currency, but the supply may still fail the export test if the place of supply is treated as India under a specific provision.

Similarly, an invoice addressed to Dubai will not prove an export if the actual recipient and beneficiary of the service is an Indian entity.

Export of Services Is Zero-Rated, Not Exempt

The distinction between a zero-rated supply and an exempt supply is commercially important.

An export of services is a zero-rated supply under Section 16 of the IGST Act. A registered exporter can generally make the supply through one of the permitted routes:

• Export under a Letter of Undertaking without paying IGST and claim a refund of eligible unutilised input tax credit; or
• Use the legally available tax-payment and refund route, subject to the conditions, restrictions and procedures applicable for the relevant period.

By contrast, an exempt supply generally restricts the availability of input tax credit attributable to that supply.

Zero rating is intended to remove Indian GST from eligible exports while preserving the exporter’s ability to claim input tax credit, subject to the law and documentary requirements.

The exporter should therefore report the supply as a zero-rated export rather than simply excluding the invoice from GST returns.

Identifying the Real Recipient

One of the most common disputes concerns the identity of the recipient.

The recipient is ordinarily the person contractually liable to pay the consideration. However, tax authorities may also examine the commercial arrangement to determine who actually requested, received and benefited from the service.

A UAE entity should not be treated as the recipient merely because:

• Its name appears on the invoice;
• It transferred the payment;
• It belongs to the same group as the Indian beneficiary;
• It signed a general agreement; or
• It acts as a payment-collection centre.

The following documents should tell a consistent story:

• Service agreement;
• Purchase order;
• Scope of work;
• Email instructions;
• Deliverables;
• Invoice;
• Bank records; and
• Evidence showing how the customer used the service.

Suppose an Indian market-research firm is engaged and paid by a Dubai company to prepare a UAE expansion study. The report is commissioned, controlled and used by the Dubai company. The UAE entity may be the genuine recipient.

The result may be different where an Indian group company receives and uses the work while a UAE affiliate merely pays the invoice.

The General Place-of-Supply Rule

Where either the supplier or recipient is outside India, Section 13 of the IGST Act generally determines the place of supply.

Under the default rule in Section 13(2), the place of supply is the location of the recipient. If the recipient’s location is not available in the ordinary course of business, the place of supply becomes the location of the supplier.

For many business-to-business services supplied by an Indian business to a genuine UAE customer, the default rule can place the supply outside India.

Services that may ordinarily fall under the default rule, depending on their facts, include:

• Management consultancy;
• Accounting support;
• Software development;
• Graphic design;
• Business research;
• Data analytics;
• Remote administrative support;
• Digital marketing;
• Legal or commercial advisory;
• Content development; and
• Certain information-technology services.

The default rule applies only where no more specific provision governs the service.

Special Place-of-Supply Rules Must Be Checked First

Section 13 contains specific rules for particular services. These rules can override the customer-location principle.

Special consideration may be required for services involving:

• Goods physically made available to the supplier;
• Services requiring the physical presence of an individual;
• Immovable property;
• Admission to or organisation of events;
• Banking services to account holders;
• Short-term hiring of means of transport;
• Passenger transportation;
• Services supplied on board a conveyance; and
• Online information and database-access or retrieval services.

The correct classification depends on what is actually supplied, not merely the description used on the invoice.

A supplier should not use a broad expression such as “professional services” if the agreement shows that the service relates directly to an identified property, physical goods or an event.

Consulting and Professional Services

An Indian consultant advising a UAE company on business strategy, accounting systems, process improvement or market entry will often look to the default place-of-supply rule.

If the UAE company is the genuine recipient and no specific place-of-supply rule applies, the place of supply may be the UAE.

The service can then qualify as an export if the remaining requirements are also met.

However, the analysis changes where the consultant:

• Advises an Indian office of the UAE customer;
• Performs work directly connected with Indian immovable property;
• Arranges transactions between the UAE company and third parties;
• Supplies services to the Indian customer of the UAE company; or
• Contracts with one entity while another entity receives the benefit.

A well-drafted agreement should clearly identify the recipient, deliverables and commercial purpose of the engagement.

Software Development and IT Services

Software development, testing, remote maintenance and technology-support services supplied from India to a UAE customer can potentially qualify as exports.

The contract should show that the Indian supplier provides the service on its own account and is responsible for the stated deliverables.

Useful evidence includes:

• Technical scope;
• Project milestones;
• Access and deployment records;
• Acceptance certificates;
• Support tickets;
• Source-code delivery records;
• Timesheets; and
• Correspondence with the UAE customer.

The fact that developers work in India does not, by itself, make India the place of supply under the default rule.

Care is nevertheless required where the Indian provider merely arranges services supplied by another person or where the work is performed for an Indian establishment of the foreign customer.

Data Hosting and Cloud-Related Services

CBIC Circular No. 232/26/2024-GST clarified the treatment of certain data-hosting services supplied by Indian providers to overseas cloud-computing businesses.

Where the Indian data-hosting provider supplies comprehensive hosting services on its own account, operates the relevant infrastructure and does not arrange the cloud service between the overseas client and its end users, it should not be treated as an intermediary merely because its client serves other customers.

The circular also explains that such comprehensive hosting services are not necessarily services directly related to immovable property merely because the servers are kept in a data centre.

In the circumstances addressed by the circular, the default place-of-supply rule may apply, allowing the recipient’s overseas location to determine the place of supply. The service can qualify as an export when all other statutory conditions are satisfied. cbic-gst.gov.in

Advertising and Digital Marketing Services

An Indian advertising or digital-marketing agency may provide a complete service to a UAE customer, including campaign design, media planning, creative production, placement and performance reporting.

Where the Indian company supplies the advertising service on a principal-to-principal basis, the recipient is the foreign client and no specific provision displaces the default rule, the place of supply may be outside India.

CBIC Circular No. 230/24/2024-GST explains that an Indian advertising company purchasing media space and supplying the complete advertising service to a foreign client on its own account is not automatically an intermediary. Such a service may qualify as an export if the other conditions are met.

A different outcome may arise where the Indian business merely acts as an agent of the UAE customer in procuring advertising space from a media owner. The substance of the contract and invoicing chain becomes decisive.

The Major 2026 Change for Intermediary Services

Historically, intermediary services supplied from India to an overseas customer faced a special difficulty.

An intermediary is broadly a broker, agent or another person who arranges or facilitates a main supply between two or more persons but does not supply that main service or goods on its own account.

Before the 2026 amendment, Section 13(8)(b) treated the place of supply of intermediary services as the location of the supplier. Consequently, an Indian intermediary serving a foreign principal could have an Indian place of supply and fail the export test.

The Finance Act, 2026 omitted Section 13(8)(b). Following the omission, intermediary services are no longer governed by that special supplier-location rule. Their place of supply is determined under the applicable remaining provisions, ordinarily the default rule in Section 13(2), under which the recipient’s location becomes relevant.

The Government’s explanatory material states that the purpose of the amendment is to determine the place of supply for intermediary services under the default recipient-location rule. Union Budget

This is a substantial change for Indian businesses providing services to UAE principals, including:

• Commission agents;
• Overseas sales representatives;
• Sourcing agents;
• Business-introduction firms;
• Procurement coordinators;
• Marketing representatives; and
• Certain transaction facilitators.

An eligible service supplied to a genuine UAE recipient may now qualify as an export, provided every other export condition is satisfied.

However, the amendment does not mean that every commission invoice is automatically zero-rated. The recipient must be outside India, the contractual and payment conditions must be satisfied, and no other specific place-of-supply rule should apply.

Transactions covering periods before and after the legislative change should be separated and reviewed carefully. The applicable provision should be determined with reference to the effective law, time of supply, invoice, agreement and service period.

Supply on Own Account Versus Facilitation

Although the 2026 amendment changes the place-of-supply consequence for intermediary services, the distinction between an independent supplier and an intermediary remains commercially relevant.

An intermediary arrangement normally involves at least three parties:

• The supplier of the main goods or services;
• The recipient of the main supply; and
• A person arranging or facilitating the transaction.

A person supplying a substantive service on its own account is not an intermediary merely because the service assists the foreign client’s business.

For example, an Indian research firm preparing customer data for a Dubai company is supplying research on its own account.

An Indian company that introduces the Dubai company to an Indian customer and earns commission when the Dubai company completes the sale is more likely to be facilitating a separate main transaction.

The agreement should reflect the real activity. Changing “commission” to “consultancy fee” on an invoice does not change the legal character of the service.

Services Connected With Indian Immovable Property

A UAE customer may engage an Indian service provider in connection with land, buildings, offices, hotels or construction projects situated in India.

For services supplied directly in relation to immovable property, the place of supply is generally where the property is located.

This may apply to:

• Architectural services;
• Property valuation;
• Interior design linked to a specific property;
• Real-estate agency;
• Property management;
• Hotel accommodation;
• Construction supervision; and
• Services granting a right to use immovable property.

If the identified property is in India, the place of supply may be India even though the customer is in the UAE and pays in foreign currency. The transaction may therefore fail the export condition.

A general investment or strategy report should not automatically be classified as property-related merely because the customer operates in real estate. The relationship between the service and the identified property must be examined.

Events and Physical-Performance Services

Services relating to admission to an event are generally connected with the place where the event is actually held.

Other event-related services may also be governed by specific provisions depending on the recipient and nature of supply.

Similarly, certain services in respect of goods physically made available to an Indian supplier can have an Indian place of supply.

For example, a UAE company may send machinery to an Indian laboratory for physical testing. The location where the service is actually performed may become relevant.

Remote advice based on electronically shared documents should not automatically be treated as a service performed on physical goods. The supplier must identify what is actually being tested, examined or delivered.

Payment Must Satisfy the Export Condition

Export status generally requires the payment for the service to be received in convertible foreign exchange or in Indian rupees where receipt in rupees is permitted by the Reserve Bank of India.

A foreign address on the invoice does not cure an improper payment trail.

The exporter should ordinarily retain:

• Foreign Inward Remittance Certificate, where issued;
• Bank Realisation Certificate or electronic BRC, where applicable;
• Bank credit advice;
• SWIFT or remittance details;
• UAE customer ledger;
• Invoice-wise payment reconciliation; and
• Evidence relating to any permitted receipt in Indian rupees.

Payment by an unrelated third party, an Indian group company or the overseas customer’s Indian branch can create questions about the identity of the recipient and satisfaction of the export condition.

Third-party payments should be supported by the agreement, instructions from the customer, banking documents and FEMA compliance.

Time Limit for Realising Export Proceeds

Rule 96A of the CGST Rules requires an exporter supplying services without payment of IGST under LUT to receive the export payment within one year from the invoice date or within a further period permitted by the Commissioner.

Where payment is not received within the permitted period, the exporter may become liable to pay the applicable tax and interest in accordance with the rule.

The RBI or authorised dealer may permit or recognise a different realisation period for foreign-exchange purposes, but GST compliance under Rule 96A should also be separately examined.

Businesses should maintain an export-receivables ageing report showing:

• Invoice date;
• Customer;
• Currency;
• Amount;
• Receipt date;
• Outstanding balance;
• BRC or FIRC status; and
• GST realisation deadline.

An overdue export invoice is not only a collection issue. It can become a GST exposure.

Export Under LUT

A registered person wishing to export services without payment of IGST generally furnishes a Letter of Undertaking in Form GST RFD-11.

The LUT is filed electronically through the GST Portal and should be furnished before making zero-rated supplies without payment of tax.

The usual portal path is:

Services > User Services > Furnish Letter of Undertaking

The LUT is ordinarily filed for a financial year and should be renewed for each subsequent financial year in which exports will be made.

The GST Portal confirms that a registered taxpayer intending to provide services to a customer outside India without paying IGST must furnish the LUT before effecting the supply.

An export invoice issued under LUT should contain the prescribed endorsement indicating that the supply is meant for export under bond or LUT without payment of integrated tax.

Filing an LUT does not establish that every foreign invoice is an export. The substantive conditions must still be satisfied.

What Should Appear on the Export Invoice?

An export-service invoice should ordinarily contain the prescribed tax-invoice particulars, including:

• Supplier’s name, address and GSTIN;
• Consecutive invoice number;
• Invoice date;
• Recipient’s name and foreign address;
• Description of services;
• SAC, where applicable;
• Value and currency;
• Place of supply;
• Applicable export endorsement;
• Signature or digital authentication; and
• Payment terms and banking details.

Where the supply is made under LUT without payment of IGST, the prescribed endorsement should be used.

The supplier should avoid describing a service only as “professional fee” or “consultancy.” A meaningful description reduces uncertainty about classification and place of supply.

GST Registration for Small Service Exporters

Export of services is treated as an inter-State supply. However, the Government has granted an exemption from compulsory registration for persons making inter-State taxable supplies of services where aggregate turnover does not exceed the applicable registration threshold.

Consequently, an Indian freelancer or small service provider does not necessarily require GST registration only because the customer is in the UAE.

The general threshold is ordinarily ₹20 lakh, subject to the lower threshold applicable in specified states and other compulsory-registration provisions.

Aggregate turnover is calculated on an all-India PAN basis and includes taxable, exempt, export and inter-State supplies, subject to the statutory definition.

A person below the threshold may still choose voluntary registration. This can permit formal zero-rated reporting and refund of eligible input tax credit, but it also creates continuing return-filing and record-keeping obligations.

GST Return Reporting

A registered exporter should report export invoices accurately in the applicable tables of Form GSTR-1 and include the turnover in Form GSTR-3B.

The reporting should distinguish between:

• Export under LUT without payment of IGST; and
• Export with payment of IGST, where legally available and selected.

Invoice values, currencies, dates and amendments should be reconciled with:

• Books of account;
• Customer ledger;
• GSTR-1;
• GSTR-3B;
• LUT;
• Bank receipts; and
• Refund applications.

Differences between the invoice register, returns and bank-realisation records are common reasons for refund queries.

Refund of Unutilised Input Tax Credit

A registered exporter supplying services under LUT may accumulate input tax credit because no output IGST is paid on the zero-rated supply.

Eligible unutilised credit may be claimed through Form GST RFD-01 on the GST Portal, subject to the statutory formula, exclusions, limitation period and documentary requirements.

The GST Portal allows an exporter to file one refund application covering multiple tax periods.

Supporting documents may include:

• Export invoice statement;
• Relevant returns;
• LUT details;
• BRCs or FIRCs;
• Bank statements;
• Input-tax-credit workings;
• Electronic credit-ledger details;
• Declarations and undertakings;
• Agreements and purchase orders; and
• Evidence supporting the overseas place of supply.

Not every amount appearing in the electronic credit ledger is necessarily refundable. Blocked credits, ineligible credits and credits not connected with eligible business inputs or input services must be excluded.

The refund computation should be prepared before filing rather than relying only on portal-generated figures.

Supplies Between Indian and UAE Branches

An Indian head office and its UAE branch may be treated as establishments of the same legal person.

The export definition excludes supplies where the supplier and recipient are merely establishments of the same person treated as distinct persons under the relevant explanation to the IGST Act.

Therefore, an Indian establishment should not automatically treat services supplied to its own UAE branch as an export.

The position may differ where the overseas recipient is a separately incorporated UAE subsidiary. A subsidiary is ordinarily a different legal person, although related-party valuation, transfer pricing and the actual recipient of the service must still be examined.

The legal form of the UAE operation—branch or subsidiary—can materially change the GST result.

Practical Example: Indian Consultant Serving a Dubai Company

Assume an Indian management consultant enters into an agreement with an unrelated Dubai company.

The consultant:

• Prepares a UAE market-entry plan;
• Performs the work from India;
• Sends the report directly to the Dubai management;
• Has no contact with an Indian beneficiary;
• Issues the invoice in US dollars;
• Receives payment from the Dubai company’s UAE bank account; and
• Holds a valid LUT.

If the Dubai company is the genuine recipient and no specific place-of-supply rule applies, the recipient’s location may determine the place of supply. The supply can qualify as a zero-rated export when all remaining conditions are fulfilled.

Now assume the consultant is engaged to identify Indian buyers for products sold by the Dubai company and earns commission on completed transactions.

This arrangement may be an intermediary service. For supplies governed by the law after the 2026 omission of Section 13(8)(b), the special rule fixing the place of supply at the intermediary’s location no longer applies. The transaction may fall under the default recipient-location rule, subject to the exact facts and other export conditions.

Transactions from the earlier period should not be treated under the new position without a separate transitional analysis.

Practical Example: Indian Service Provider Supporting a UAE Group

An Indian company signs an agreement with a UAE parent company for accounting support. Its employees process data for several entities in the group, including an Indian subsidiary.

The UAE parent pays the entire fee.

The invoice should not automatically be classified as an export. The company must determine:

• Who is contractually entitled to the service;
• Which entity receives and uses each deliverable;
• Whether the Indian subsidiary receives a separate benefit;
• Whether the UAE parent is merely making payment;
• Whether related-party valuation applies; and
• Whether the arrangement contains more than one supply.

Where services are partly supplied to an Indian entity, a reasonable contractual and valuation split may be required.

Records That Should Be Preserved

An Indian business supplying services to UAE customers should retain:

• Signed customer agreement;
• Purchase order;
• UAE customer’s trade licence or incorporation details;
• Tax Residency Certificate where relevant to other tax matters;
• Correspondence establishing the scope;
• Evidence of deliverables;
• Timesheets or project reports;
• Export invoices;
• LUT acknowledgement;
• GSTR-1 and GSTR-3B reconciliations;
• BRCs, FIRCs and bank advice;
• Payment follow-up records;
• Refund calculations;
• Debit and credit notes; and
• Written place-of-supply analysis for material contracts.

A short tax-position memorandum can be valuable where the service involves agency, property, events, multiple beneficiaries or related parties.

Common Mistakes

Indian service exporters commonly weaken their GST position by:

• Assuming every foreign invoice is an export;
• Failing to identify the real recipient;
• Ignoring the place-of-supply provisions;
• Using a UAE company only as a billing or payment entity;
• Applying the post-2026 intermediary treatment to earlier transactions;
• Describing agency commission as consultancy without examining the substance;
• Filing no LUT before exporting without payment of IGST;
• Using an incorrect export endorsement;
• Receiving money from an unexplained third party;
• Failing to collect BRC or FIRC evidence;
• Ignoring the one-year payment condition under Rule 96A;
• Reporting export invoices inconsistently in GSTR-1 and GSTR-3B;
• Treating a UAE branch like a separate foreign customer;
• Claiming ineligible input tax credit as a refund; and
• Keeping no documentary evidence of the services delivered outside India.

Conclusion

Services supplied by an Indian business to a UAE customer can qualify as zero-rated exports, but the customer’s overseas address is only one part of the test.

The supplier must establish that the recipient is outside India, the place of supply is outside India, payment satisfies the prescribed conditions and the parties are not merely establishments of the same person.

The 2026 omission of the special place-of-supply rule for intermediary services is a significant development for Indian agents and commission-based businesses serving UAE principals. It can make export treatment available in situations that previously attracted Indian GST, but only where the remaining statutory conditions are satisfied.

The safest approach is to review the contract before issuing the first invoice. Recipient identity, place of supply, payment route, LUT and return reporting should all support the same tax position.

In cross-border services, a correctly addressed invoice is helpful. A correctly structured and documented transaction is decisive.

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Disclaimer: This article is intended solely for general educational and informational purposes. It does not constitute legal, GST, FEMA or professional advice. Tax treatment depends on the contractual terms, nature of service, identity and location of the recipient, place of supply, payment arrangements and law applicable to the relevant period. Businesses should verify the effective provisions, notifications, return procedures and foreign-exchange requirements and obtain professional advice before treating a supply as an export or claiming a GST refund.

Official References

• Central Board of Indirect Taxes and Customs — Integrated Goods and Services Tax Act, 2017.
• Ministry of Finance, Government of India — Finance Act, 2026 GST Amendment Explanation.
• CBIC Circular No. 230/24/2024-GST — Place of Supply for Advertising Services.
• CBIC Circular No. 232/26/2024-GST — Data Hosting and Export of Services.
• GST Portal — Filing Letter of Undertaking for Export of Services.