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An Indian office’s service to an overseas branch or head office of the same legal person is not an export of services under India’s IGST Act. The Act treats the two establishments as distinct persons, but the export definition requires that supplier and recipient not merely be establishments of the same person. A separately incorporated Indian subsidiary is different: it is a separate person from its foreign parent and may qualify as an exporter if it meets every other statutory condition.
This distinction concerns legal identity, not simply whether the recipient is abroad or the payment arrives in foreign currency. The analysis below reflects the law and official materials checked on 7 October 2026; confirm the provisions and rules applicable to the transaction period, as well as current RBI permissions, before filing or advising.
Same company or separate companies? Start with legal identity
The first question is whether the Indian and overseas offices belong to the same legal person. A branch is generally an establishment of its company, not a separate incorporated company. A subsidiary, by contrast, is separately incorporated and is a different legal person from its parent.
| Transaction | Export-condition (v) result | What else matters |
|---|---|---|
| Indian branch or head office supplies its overseas head office or branch, and both are establishments of the same legal person | Does not qualify as export of services: the distinct-establishments exclusion applies. | Other GST treatment depends on the transaction and applicable provisions; foreign-currency or permitted INR payment does not remove this exclusion. |
| Separately incorporated Indian subsidiary supplies its foreign parent | Condition (v) does not, by itself, bar export treatment. | The subsidiary must still meet all the other export conditions, including recipient location, place of supply, and payment requirements. |
| Head office in one Indian State deals with a branch registered in another State | This is a domestic distinct-person issue, not an export-of-services question. | Consider invoicing, input-tax-credit distribution, and valuation under the relevant provisions and facts. |
Section 8, Explanation 1 of the Integrated Goods and Services Tax Act (IGST Act) treats an establishment in India and another establishment of the same person outside India as establishments of distinct persons. Explanation 2 addresses a person carrying on business through a branch or agency in a territory as having an establishment there. These rules explain why different countries do not, on their own, turn a same-company branch transaction into an export.
CBIC Circular 161/17/2021-GST, dated 20 September 2021, addresses supplies between Indian and overseas establishments of the same person and distinguishes them from supplies between separately incorporated companies. Its clarification that such supplies may qualify as exports subject to the other conditions refers to the separate-incorporated-person case—not a branch and head office of one company.
Apply all five statutory export conditions
Section 2(6) of the IGST Act defines an export of services through five cumulative conditions. Each must be met; satisfying only the foreign-recipient or payment condition is not enough.
- The supplier 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 wherever permitted by the Reserve Bank of India (RBI).
- The supplier and recipient are not merely establishments of a distinct person under Explanation 1 to section 8.
For a same-legal-person transaction between Indian and overseas establishments, condition (v) is the obstacle even if the other conditions appear to fit. For a subsidiary-parent transaction, that particular obstacle does not apply, but the facts still need to satisfy the remaining conditions.
Check the actual service and its place of supply
For cross-border services, section 13 of the IGST Act generally places the supply at the recipient’s location, subject to listed exceptions. One material exception is intermediary services: under section 13(8), the place of supply is the supplier’s location. If that location is in India, the outside-India place-of-supply condition may not be met.
Whether a service is an intermediary service depends on what the supplier actually does, including whether it supplies a service on its own account or arranges or facilitates a supply between other parties. Do not classify a service as intermediary merely because it is provided by a head office, supports a related entity, or involves coordination. Identify the service, the recipient establishment most directly concerned with receiving it, and any applicable place-of-supply exception.
Do not confuse overseas transactions with cross-State branch transactions
A head office in one Indian State and a branch registered in another State raise domestic GST questions because separate registrations can be treated as distinct persons under section 25 of the Central Goods and Services Tax Act. These issues are different from deciding whether a service to an overseas establishment is an export.
Common third-party services procured by the head office
CBIC Circular 199/11/2023-GST, dated 17 July 2023, addresses common input services procured by a head office for one or more branches. For services attributable to branches, it describes two routes under the provisions it addresses: the head office may distribute eligible credit through the Input Service Distributor (ISD) mechanism, or issue tax invoices to the relevant branches. The applicable statutory input-tax-credit conditions and the service’s attribution to, or provision for, the branch still matter. The head office needs ISD registration if it uses the ISD route.
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Services generated internally by the head office
The same circular discusses valuation under Rule 28. Where the recipient branch is eligible for full input tax credit, the value declared on the invoice is deemed to be the open market value, even if it excludes a particular cost component such as employee cost. If no invoice is issued for a service and the branch has full input tax credit, the circular says the value may be deemed nil. It also states that the head-office employee salary cost need not mandatorily be included in the taxable value of internally generated services even where the branch does not have full input tax credit.
These are the circular’s explanations for the provisions it addresses, not a substitute for checking the applicable version of Rule 28, later amendments, the branch’s credit eligibility, and the transaction facts for the relevant period.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Payment in INR and zero-rating are separate questions
The export definition allows payment in convertible foreign exchange or in Indian rupees wherever RBI permits. Circular 88/07/2019-GST discusses INR realization under applicable RBI rules and says LUT treatment is permissible for covered supplies irrespective of whether payment is in INR or foreign currency, when RBI guidelines are followed. Circular 165/21/2021-GST also refers to payment in foreign exchange or permitted INR, while clarifying that the payment channel alone does not establish export status if the place of supply is in India.
Accordingly, verify the RBI permission and payment documentation relevant to the transaction. A remittance in foreign currency—or in INR where permitted—cannot overcome the exclusion for services between establishments of the same person.
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A free scan shows the junk files, broken settings and background clutter dragging Windows down - then fixes them in one click.Free scan · Windows 10 & 11Services that meet the statutory definition of export are zero-rated under section 16. The Act provides for supply under a bond or Letter of Undertaking (LUT) without payment of IGST and a refund of eligible unutilized input tax credit, or payment of IGST followed by a refund claim under the applicable statutory provisions and rules. These are routes for a qualifying export; choosing one does not make a same-person branch transaction an export.
Quick Recap
Practical checks before treating a service as an export
- Confirm whether the Indian and overseas operations are branches or establishments of one legal person, or separately incorporated companies.
- Identify the recipient establishment for the particular service; do not rely only on the group structure, contract label, or overseas address.
- Test all five conditions in section 2(6), including the place-of-supply rules and any section 13 exception.
- Check that the payment method and evidence comply with the RBI permissions applicable to the transaction.
- If the transaction is between registrations in different Indian States, analyze domestic invoicing, credit distribution, and valuation separately.
- Use the version of the statute, rules, circulars, and procedural requirements applicable to the period in question.
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