Businesses in India that supply goods or services to overseas clients often invoice in foreign currencies such as USD, EUR, or GBP. This is normal commercial practice and must still satisfy the GST law. Foreign currency invoices under GST must be properly valued, documented, paid through compliant channels, and reported to avoid issues during GST audits or refunds.
This guide outlines the GST compliance requirements for foreign currency invoicing in India. It describes the filing requirements and shows how Indian companies and businesses can comply with the help of GST software and E-invoicing software.
What does foreign currency invoicing mean under GST
Foreign currency invoicing is when the value of the tax invoice is expressed in a currency other than the Indian Rupee. An Indian supplier can issue a foreign currency-denominated invoice for export transactions under the GST law so long as they satisfy the requirements for reporting and valuation under the law.
However, when the commercial invoice is issued in US dollars or other foreign currency, the taxable value is required to be determined in Indian rupees for the purposes of compliance and filing of return as per the GST law.
Applicability of GST on foreign currency invoices
An exporter, while invoicing in foreign currency, must consider the applicability of GST and the treatment with respect to Indian exports.
The invoice, therefore, does not charge any GST, as the export of the goods and/or services would be a zero-rated supply under the IGST Act.
The transaction is an export only if, for services:
- The supplier is located in India
- The recipient must be located outside India
- Place of supply is outside India
- Payments are received in convertible foreign exchange (or permitted INR settlement)
- Supplier & recipient are not merely establishments of the same entity
If any of these conditions are not met, it may be treated as a taxable supply in India.
Currency denomination and INR value reporting
Although the GST Law allows these invoices to be in foreign currency, the valuation has to be done in Indian rupees.
To ensure compliance:
- The invoice can be denominated in a foreign currency
- The equivalent INR amount must also be mentioned on the invoice or on a document referenced by the invoice
- Thus, the exchange rate should be applied according to generally accepted accounting principles on the day of supply
This INR value is used for filing GST returns, claiming a refund, and auditing.
Zero-rated supplies and invoice declaration
Exports are zero-rated under GST, and should be clearly stated on the tax invoice to avoid disputes for refund claims and departmental verification of the tax invoices.
A compliant export invoice should include:
- A plain mention can be like: "Export of services - zero-rated supply under IGST"
- No GST amount is mentioned in the invoice
- Reference to LUT or bond, if applicable
Filing without the declaration can result in payment delays or increased scrutiny of the returns.
RBI-authorised payment channels and settlement rules
GST compliance also has to be read along with foreign exchange regulations under the Foreign Exchange Management Act, 1999 (FEMA), and directions of the Reserve Bank of India (RBI) whereby export proceeds need to be realised through prescribed banking channels.
Important points to follow include:
- Payments are to be received from RBI-authorised banks
- Settlement may be in foreign currency or permissible INR mechanisms, such as Special Rupee Vostro Accounts
- Keep all banking records for verification purposes
This was to ensure that the sales proceeds of exports were traceable and charged GST.
Mandatory documentation for foreign currency invoicing
Documentation is required for foreign currency transactions to satisfy GST audit requirements, claim refunds, and avail of input tax credit (ITC).
Businesses should maintain:
- Tax invoices issued in foreign currency
- Foreign Inward Remittance Certificate (FIRC) or Bank Realisation Certificate (BRC) as well
- Export contracts or service agreements
- Proof of export, if applicable
The documents evidence the nature of the supply and receipt of the export proceeds.
Reporting foreign currency invoices in GST returns
For GST compliance, exporters must report export transactions in the GST returns.
In practice:
- Export turnover is reported in GSTR-1 under export supplies
- As a result, these figures are reflected in GSTR-3B
- Details should align with banking realisation documents
Discrepancies in invoices, return documents, and FIRCs can result in notices or delayed refunds.
GST on forex and banking services
Even though export invoices are zero-rated, banks and authorised dealers may require GST on the foreign exchange conversion fees.
This GST is calculated based on:
- Prescribed valuation methods notified by tax authorities
- The margin at which the bank sells over the RBI reference rates
This is a separate cost for businesses to bear, and does not affect the zero-rated status of their exports.
Using GST software for foreign currency invoicing
A manual system for calculating foreign currency invoices may create exposure to miscalculations, misreporting, regulatory non-compliance, and other similar events; therefore, many exporters use GST software to ease these processes.
This software is often business-oriented:
- Record invoices in foreign currency
- Convert transaction values to INR for statutory reporting
- Keep documentation of the above export activities
- Generate GST returns based on this invoice data
It is especially useful where businesses have high volumes of cross-border transactions and a need to maintain an auditable trail.
Role of e-invoicing software in export invoicing
Only the notified taxpayers in certain classes and whose turnover crosses a specified limit will have to issue e-invoices under GST. The software converts these e-invoices into a standard format with standardised data.
For eligible exporters, this system supports:
- Structured and verified invoice information
- Smoother return filing and reconciliation
- Better prepared for departmental audits
Businesses are advised to look out for the latest government announcements before issuing any e-invoicing for exports.
How does TallyPrime support foreign currency invoicing under GST?
Manual entry for foreign currency invoices can lead to errors in the exchange rate, leading to miscalculation and reporting discrepancies. TallyPrime provides separate accounting and GST workflows.
With TallyPrime, businesses can:
- Create invoices that can be billed in multiple foreign currencies, with automatic conversion to INR
- Track export invoice available for GST reporting
- Maintain proper records in relation to the GST returns and banking
The structure improves compliance without adding operational complexity.
Final thoughts
The option of foreign currency invoicing is available under the GST regime in India. There are additional compliance requirements around valuation, documentation, payment realisation, and reporting. When these conditions are met, exports qualify as zero-rated supplies, and eligible benefits can be claimed as per law.
With structured workflows and dependable GST software in place, Indian exporters can issue foreign currency invoices while maintaining a clear audit trail for growing cross-border transactions. Solutions such as TallyPrime support this process by enabling accurate multi-currency invoicing, organised export records, and GST-aligned reporting within a single system, helping businesses manage compliance without disrupting day-to-day operations.
