GST for GCCs: Export of Services, LUT Filing and Keeping Intercompany Invoices Zero-Rated

TL;DR: A Letter of Undertaking (LUT) under GST lets a GCC in India invoice its overseas parent for services without paying IGST, but only when each invoice meets every condition for an export of services. The LUT must be filed for the financial year before the first zero-rated invoice is raised, and it cannot rescue a service that GST treats as intermediary work or a GCC that operates as a branch of its parent. Our research found no published figure on how often GCC zero-rating is challenged, so the case for discipline rests on how the rules work rather than on market data. Generative AI can draft the paperwork, yet as Lumenalta puts it^[1], fluency can hide mistakes, which raises risk in legal, financial and operational work.

An LUT lets a GCC invoice its parent without paying IGST first

A Letter of Undertaking (LUT) is a declaration that a GST-registered exporter files on the GST portal, undertaking to meet the export conditions so it can supply goods or services without paying integrated GST (IGST). For a GCC, the LUT is the document that lets the monthly cost-plus invoice to the parent leave India at a zero rate of tax. A global capability centre (GCC) is an offshore unit, usually an Indian subsidiary, that delivers technology, finance, analytics or operations work to its own group.

Zero-rated supply

a supply on which no output tax is payable while the supplier keeps its right to input tax credit on what it bought to make that supply.

Zero-rating does not mean a GCC pays no GST. The centre still pays tax on its office lease, laptops, staffing vendors and the hosting its delivery teams run on, and that credit sits in the ledger until a refund releases it. Hosting often crosses a state line too: CBRE India notes that over 80 per cent of India’s operational data centre capacity remains concentrated in Mumbai, Chennai and Delhi-NCR^[2], as ETTelecom reported in October 2026. A GCC registered in Bengaluru or Hyderabad that buys capacity in those cities typically receives IGST on the vendor invoice, which adds to the same refundable pool.

GST gives an exporter of services two routes to zero-rating. The table sets them side by side.

Which intercompany services count as an export of services?

An intercompany supply is an export of services only when every condition below holds at once. Miss one and the invoice is a domestic taxable supply, because an LUT cannot turn a domestic supply into an export.

• The supplier is located in India. Every Indian subsidiary GCC meets this. The condition matters mainly in deciding which GST registration issues the invoice when the centre has offices in more than one state.

• The recipient is located outside India. The entity named on the invoice and in the intercompany agreement must sit abroad. A group that routes billing through another Indian company, for convenience or a regional holding structure, fails here before any other test applies.

• The place of supply is outside India. For most IT, engineering, analytics and finance work, the place of supply follows the recipient’s location. Intermediary services, and services performed on goods physically in India, are the exceptions: their place of supply stays in India.

• Payment arrives in convertible foreign exchange. The parent pays in foreign currency, or in rupees where the Reserve Bank of India permits it. Settling by book entry against amounts the GCC owes the parent needs care, because the test is about receipt rather than a balance cleared on paper.

• Supplier and recipient are not merely establishments of one person. An Indian subsidiary and its foreign parent are separate legal persons, so an incorporated GCC clears this condition. A centre run as a branch or project office of the foreign company usually fails it.

Intermediary

under GST, a broker, agent or other person who arranges or facilitates a supply between two or more other parties, without supplying the main service on its own account.

The intermediary question reaches GCCs more than any other. A centre that writes code, closes books or runs analytics for its parent supplies on its own account. One whose teams negotiate with the parent’s vendors or support the parent’s sales starts to resemble an intermediary, and the place of supply moves back to India. The scope clause in the intercompany agreement is the first document a tax officer reads on this point, so it should describe what the centre actually delivers.

Since GST began, the intermediary line has been argued over repeatedly, which makes it a poor fit for a chatbot answer. Commentators note that ChatGPT’s knowledge is tied to a training cutoff^[3], though browsing features partly close the gap. A GCC needs the current position, read from the current text.

A GCC files its LUT once a year, before the first export invoice

The filing itself takes little time. Keeping it valid across a year of intercompany billing is the real work, and it follows a fixed sequence.

1. Confirm eligibility and the signatory. The LUT is filed by the registered entity under an authorised signatory, with witnesses named in the declaration. Not every taxpayer may use the route, so a GCC with any history of tax-evasion prosecution should confirm eligibility with its adviser first.

2. File on the GST portal before the financial year begins. Each GST registration needs its own LUT, so a GCC registered in two states files two. Keep the acknowledgement and its reference number, because every export invoice for the year will quote it.

3. Word the invoice for export. The invoice should state that the supply is meant for export under LUT without payment of IGST, and carry the LUT reference. Invoice templates inherited from a parent’s ERP rollout often omit this line.

4. Report the supply as zero-rated in the outward supplies return. The export belongs in the section for supplies made without payment of tax. A mismatch between the return and the invoice register is the first thing a refund officer queries.

5. Track receipt of foreign exchange against each invoice. If payment does not arrive within the period the foreign exchange rules allow, IGST becomes payable on that invoice with interest. Tie the tracker to the intercompany settlement calendar, not to the treasury team’s memory.

6. Claim the input tax credit refund on a fixed cycle. Unclaimed credit is cash the GCC has already spent. Hosting keeps adding to it as capacity expands: two trade outlets reported in October 2026 on CBRE’s projection that India will reach 2 GW of operational data centre capacity by end-2026^[4].

7. Diarise the renewal. The LUT covers one financial year, and the next year needs a new one. Put the filing in the year-end close checklist with a named owner.

Zero-rating usually breaks in the paperwork, not in the law

No published figure exists for how many Indian GCCs export under an LUT, or for how often their zero-rating is challenged. Our research found none, and Astravise does not publish numbers it cannot attribute. What the rules do make clear is where the weak points sit.

• An agreement that describes the wrong business. Intercompany agreements are often copied from a group template written for a sales subsidiary. Language about promoting or facilitating the parent’s business invites an intermediary reading of a centre that does nothing of the kind.

• A lapsed LUT. Renewal falls at the turn of the financial year, exactly when close work peaks. Invoices issued before the new LUT is filed sit outside its cover.

• Billing from the wrong registration. A second office, a new state registration or a group restructuring can change which GSTIN should issue the invoice. An LUT filed under the old registration does not travel with the work.

• Settlement that never becomes a receipt. Netting intercompany payables against receivables is tidy for treasury. For GST, the question is whether foreign exchange was actually received against the export invoice.

• Memos nobody traced to the source. Teams increasingly draft tax positions with generative AI, and ChatGPT is widely described as prone to hallucination^[5], producing information that sounds plausible but is factually incorrect. Any memo that cites a circular or a ruling should be checked against the document itself.

Astravise has run the finance and governance workstreams through complete GCC builds, including the Hyderabad GCC it set up for a US-listed logistics company. Our experience suggests the cheapest moment to settle all of this is before the first invoice, when the agreement, the registration plan and the invoice template can be designed together.

Generative AI can draft GST documents, but a named person must decide

Generative AI earns its place at the clerical end of GCC tax work: drafting invoice narration, summarising an intercompany agreement, turning a renewal process into a checklist. The judgement calls are different. Marketing-software firm SOCi notes that ChatGPT can deliver incorrect information in a confident tone^[6], which makes errors hard to spot, and an intermediary classification is precisely where a confident wrong answer costs most.

In practice that splits the work cleanly. Drafting, summarising and formatting can go to a tool, with a reviewer reading the output against the source document. Service classification, place of supply, LUT eligibility and anything else that changes an invoice’s tax treatment stay with a person who can be named in the file. The split holds best when the GCC’s finance policy states it, rather than leaving it to individual judgement at month-end.

Confidentiality is the second constraint. Intercompany agreements carry cost bases, markups and the names of the parent’s customers and vendors. A 2024 peer-reviewed review in Data Intelligence lists malicious misuse and privacy violation^[7] among the impacts of ChatGPT’s limitations that its authors examine.

Before anyone pastes an agreement into a public chatbot, the GCC should publish a short list of approved tools and the document classes each may handle. Transfer pricing files, refund workings and parent contracts usually belong in the restricted class. Keeping that list current is a governance task with an owner, reviewed when the tools change and whenever the GCC takes on a new line of work for the parent.

Incidents already occur at measurable rates. Stanford’s 2025 AI Index, as cited by Lumenalta, reports that 8% of surveyed organizations experienced AI-related incidents in 2024^[8]; that is a global survey figure, and no comparable figure exists for India or for GCCs. The working rule Astravise recommends is short: AI drafts, a named person decides, and the file records the reasoning in that person’s words.

Questions GCC finance teams ask about LUT in GST