India’s proposed GST changes could make it easier for some service providers to treat work for overseas clients as an export. The key proposal would remove the special place-of-supply rule for intermediary services and apply the general rule, which places the supply where the recipient is located. That change alone would not make every service billed abroad an export: the other statutory conditions must also be met, and the proposal’s commencement must be confirmed before relying on it.
What is the proposed change to intermediary services?
The GST Council recommended omitting section 13(8)(b) of the Integrated Goods and Services Tax Act, 2017. Under the existing special rule, the place of supply for intermediary services is generally the supplier’s location. The proposal would instead apply section 13(2), the general rule that places the supply where the recipient is located. The Council’s stated rationale is to let eligible intermediary services supplied from India to overseas recipients be considered under export-related provisions. See the GST Council’s 56th-meeting press release and the January 2026 GST Council newsletter.
For a service provider in India, the practical difference is the place-of-supply limb of the export test: if the recipient is abroad, the proposed general rule could place the supply outside India rather than at the Indian supplier’s location. The change concerns classification under the place-of-supply rules; it is not, by itself, an exemption from GST or a guarantee that a transaction qualifies as an export.
Would a service for a foreign client automatically count as an export?
No. The export-of-services definition has multiple conditions. In addition to the place of supply being outside India, the service must have an Indian supplier and an overseas recipient; payment must be received in convertible foreign exchange or permitted Indian rupees; and the supplier and recipient must not be merely establishments of the same person. The proposed intermediary amendment addresses the place-of-supply condition, not the rest of this test. Review the transaction against the applicable law and the official CBIC GST rules.
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For example, an Indian consultant invoicing a foreign business should not assume that the invoice alone establishes export treatment. The nature of the service, the parties’ relationship, where the place-of-supply rules locate it, and how payment is received all matter. The same caution applies to freelancers and other service exporters.
How does the proposal compare with the current rule?
| Issue | Current rule described in the proposal | Proposed treatment |
|---|---|---|
| Place of supply for intermediary services | Section 13(8)(b) generally locates it at the supplier’s location. | Omit section 13(8)(b) and apply section 13(2), generally locating it at the recipient’s location. |
| Place-of-supply limb of the export test | The supplier-location rule may prevent the place of supply from being outside India for an Indian supplier. | An overseas recipient’s location could meet this limb, depending on the transaction and applicable rules. |
| Other export-of-services conditions | Apply; they are separate requirements. | Still apply; the proposal does not remove them. |
| Refund and reporting | Subject to the governing export, refund and reporting provisions. | No automatic refund follows from the proposed place-of-supply change; applicable rules and records remain relevant. |
| Legal status and start date | Existing law applies unless and until amended and commenced. | The Finance Bill 2026 materials describe the amendment as a proposal; commencement must be verified in enacted law and the applicable notification. |
What does this mean for refunds and GST records?
Export classification and refund eligibility are related but distinct questions. CBIC’s refund rules prescribe a formula for refund of unutilized input tax credit on qualifying zero-rated supplies. In calculating export turnover of services, the rules account for payments received during the relevant period, completed services for which an advance was received earlier, and adjustments for advances received for services not completed during that period. The calculation therefore depends on statutory definitions, timing and supporting records, not just the fact that a customer is overseas. Consult the CBIC rules and transaction-specific professional advice before making a claim.
Questions such as whether a freelancer with all overseas clients can claim a cash refund of accumulated ITC, or whether a consultant needs to pay GST when providing services to a foreign client under a Letter of Undertaking (LUT), cannot be answered from the client’s location alone. They depend on whether the supply meets the legal requirements for export or zero-rating, the applicable route and conditions, and the refund rules and records. This overview is not a determination of any individual supplier’s liability or refund entitlement.
What other GST changes were proposed?
The intermediary-services proposal was part of a broader package, but the accompanying recommendations serve different groups and should not be confused with service-export eligibility.
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Fix the driver behind crashes, sound loss and screen glitchesFind Drivers →Clear out junk files and repair common Windows errorsFree Scan →- Simplified registration: An optional route was proposed for eligible low-risk applicants, with registration intended within three working days subject to the stated conditions. The GST Council said around 96% of new applicants applying for GST registration fell within the context of the proposed scheme; that figure is about registration applicants, not service exporters.
- Inverted-duty refunds: The Finance Bill 2026 explanatory materials describe proposed provisional refunds of 90% for claims arising from an inverted duty structure, subject to applicable provisions.
- Refund threshold for goods exports: The Council recommended removing the minimum refund threshold for exports made with payment of tax, particularly to assist small exporters using courier or postal channels. This concerns goods-export consignments, not the definition of service exports.
The Council’s descriptions appear in its 56th-meeting release; the proposed refund and commencement details are set out in the Finance Bill 2026 materials.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Has the intermediary-services change taken effect?
The materials available for this article establish that the GST Council recommended the change and that Finance Bill 2026 materials describe it as a proposal. Those materials say most amendments take effect on a date notified, coordinated as far as possible with corresponding state and union-territory amendments. They do not establish whether section 13(8)(b) had been omitted and the change commenced by 7 October 2026.
Before applying the recipient-location rule to a transaction, check the enacted amendment and the applicable commencement notification for the relevant date. Until that is confirmed, do not treat the proposed rule as operative merely because it was recommended or included in Finance Bill materials.
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