In a significant move aimed at boosting India’s services exports, the 56th GST Council meeting chaired by Union Finance Minister Nirmala Sitharaman has recommended a key amendment in the Integrated Goods and Services Tax (IGST) Act, 2017.
The Council has proposed the omission of clause (b) of Section 13(8) of the IGST Act, which presently determines the place of supply for intermediary services as the location of the service provider. Once the amendment takes effect, the place of supply for such services will instead be determined under the default rule of Section 13(2) of the IGST Act — i.e., the location of the recipient of services.
This change will effectively treat intermediary services provided by Indian entities to overseas clients as “exports of services,” making them eligible for export-related benefits, including zero-rated tax treatment.
Industry experts and exporters have long demanded this reform, as the existing provision created tax disadvantages for Indian intermediaries providing services to foreign clients. The reform is expected to remove ambiguities and bring India in line with global tax practices.
Speaking after the meeting, officials highlighted that this step is a part of the government’s broader vision to simplify GST provisions and strengthen India’s position as a global hub for services.
The proposed amendment will come into force after the necessary legislative changes are carried out in Parliament.
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