How to start an IT services exporter in India: registrations and licences

Choosing between an LLP and a company

Bootstrapped service firms often choose an LLP for lower compliance: no mandatory audit until turnover exceeds ₹40 lakh or contribution exceeds ₹25 lakh, and no board meeting formalities. Profits are taxed at the LLP level and partners can withdraw them without further tax.

A private limited company is better if you plan to hire at scale, issue ESOPs, sell the business or take investment. Many large clients also prefer contracting with a company. If you are an Indian subsidiary of a foreign group, transfer pricing rules apply to your intra-group billing.

Registrations for an IT services exporter

Most of what you need is tax and corporate registration. Import Export Code is generally associated with goods; services exporters typically need it only if they claim benefits under the Foreign Trade Policy or their bank asks for it.

GST rules for exporting services

A supply is an export of services when the supplier is in India, the recipient is outside India, the place of supply is outside India, payment is received in convertible foreign exchange or in rupees where RBI permits, and the parties are not just establishments of the same person. Software development, IT support and consulting for foreign clients usually qualify, but services connected to goods or immovable property in India may not.

Exports count towards aggregate turnover, so a firm with ₹25 lakh of export revenue must register. Most exporters file an LUT and invoice without tax, then claim refunds of accumulated input tax credit on rent, laptops and professional fees through the GST refund process.

Foreign exchange and banking records

Receive payments into your Indian bank account through normal banking channels and ask the bank for a foreign inward remittance advice or certificate. Match each receipt to an invoice and keep a register. GST refund claims and income-tax assessments both rely on these records.

Export proceeds must be realised within the period prescribed by RBI. If a client delays payment, speak to your authorised dealer bank before the deadline. Avoid routing payments through personal accounts or third-party wallets, which creates FEMA and tax problems.

Ongoing compliance

File GST returns monthly or quarterly and report exports separately. Renew the LUT before 1 April each year. Deduct TDS on payments to contractors, freelancers and rent, and file quarterly TDS returns.

Tax audit applies to a business with turnover above ₹1 crore, or ₹10 crore if cash receipts and payments are each within 5% of totals, under section 63 of the Income-tax Act 2025. Most export firms with digital receipts fall under the higher limit, but company law audit applies to every company regardless of size.

Pitfalls for service exporters

Refund claims are often delayed by gaps in documentation, so file them regularly with invoice-wise remittance details rather than in one large claim at year-end.

• Forgetting to renew the LUT and issuing zero-rated invoices without one.
• Not registering for GST because 'exports are exempt'; they still count towards turnover.
• Using freelancer or personal PayPal accounts for business receipts.
• Billing an overseas parent without transfer pricing documentation.

Step by step

1. 1Choose and register the entity

   Incorporate an LLP or private limited company.

2. 2Open a current account

   Use a bank that handles export remittances and issues remittance advices.

3. 3Register for GST

   Register once exports and domestic turnover approach ₹20 lakh.

4. 4File the LUT

   Submit the LUT on the GST portal before your first export invoice.

5. 5Sign client contracts

   Define scope, currency, payment terms and IP ownership.

6. 6Track remittances

   Match every foreign receipt to an invoice and keep the bank advice.

7. 7Claim refunds

   File GST refund claims for unutilised input tax credit periodically.