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As of 7 October 2026, reports said the GST Council was expected to consider a proposal on the export status of services supplied through an Indian company’s overseas branch; those reports do not confirm that the Council approved a change. Under the published rule, services between establishments of the same person do not satisfy one of the five conditions for an export of services. Payment from abroad alone does not change that result.
What is the current GST test for an export of services?
Section 2(6) of the Integrated Goods and Services Tax Act, 2017 sets out five conditions. A service qualifies as an export only when all five are met:
- The supplier of the service is located in India.
- The recipient is located outside India.
- The place of supply is outside India.
- Payment is received in convertible foreign exchange, or in Indian rupees where the Reserve Bank of India permits it.
- The supplier and recipient are not merely establishments of a distinct person under section 8.
The GST Council’s 52nd meeting materials reproduce these conditions. The Council’s 45th meeting analysis explains that, for IGST purposes, establishments of the same entity in India and abroad are treated as distinct persons. It says a service supplied between those establishments is not covered by the then-current definition of export of services.
Section 2(6)(v), as reproduced in the Council’s published material, requires that “the supplier of service and the recipient of service are not merely establishments of a distinct person in accordance with Explanation 1 in section 8”. This is a separate condition from the payment requirement: receiving foreign currency does not, on its own, make a same-entity branch supply an export.
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What change was reportedly under consideration?
Reports dated 5 and 6 October 2026 said the Council was expected to consider a proposal at its 7 October meeting concerning the export definition. The reporting described an aim to align the definition with commercial activity generating foreign exchange and to clarify the treatment of services supplied through an Indian company’s overseas branch. See The Economic Times/PTI report of 5 October and ETCFO’s report of 6 October.
These were reports of a proposal scheduled for consideration, not evidence of an approved amendment. They do not establish final statutory wording, eligibility requirements, a commencement date, transition arrangements, or implementation through legislation, notification, or circular.
How does the published rule compare with the reported proposal?
| Issue | Published statutory baseline | Reported proposal |
|---|---|---|
| Same-entity overseas branch | The fifth condition excludes supplies where the supplier and recipient are merely establishments of a distinct person. The Council’s 45th meeting analysis says services between establishments of the same entity do not qualify as exports under the then-current definition. | Reports described a proposal to clarify the treatment of services supplied through an Indian company’s overseas branch; they did not provide final wording. |
| Foreign-exchange earnings | Payment must meet the statutory foreign-exchange condition, including the allowance for Indian rupees where permitted by the RBI. The other four conditions still apply. | Reports described an intention to align the definition with commercial activity generating foreign exchange. Detailed criteria were not stated. |
| Legal status and timing | The published Council materials reproduce the existing five-part test. | Expected Council consideration was reported for 7 October 2026. Approval, an effective date, and implementing measures were not stated in those reports. |
Has the GST Council changed the rule?
The available reports do not establish the outcome of the Council’s 7 October 2026 meeting or confirm any implementing legal instrument. They therefore cannot support a claim that the export rule has changed or that overseas-branch services now qualify. The legal position should be checked against an official post-meeting release and any subsequent amendment, notification, or circular. Until a change is confirmed in an applicable legal instrument, the published five-condition test remains the relevant baseline described in the Council materials.
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For a cross-border branch arrangement, assess the full statutory test rather than relying only on the source or currency of payment. In particular, establish who the supplier and recipient are for the transaction and whether they are establishments of the same person. For decisions about GST treatment, also check for later changes to the law and the facts of the specific arrangement; the Council materials and October reports do not provide a final rule for the reported proposal.
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