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Short answer: An India-based service is an export only when it passes all five conditions in section 2(6) of the Integrated Goods and Services Tax (IGST) Act: the supplier is in India, the recipient is outside India, the place of supply is outside India, payment is received in convertible foreign exchange under the applicable statutory wording, and the parties are not merely establishments of the same legal person. A foreign customer, overseas bank account or foreign-currency invoice by itself does not establish export status.
This guide reflects the statutory wording and CBIC clarifications available through 13 October 2026. GST treatment can change through amendments, notifications and court decisions, so confirm the current law for the transaction date and keep a file showing how every condition was tested.
The five conditions you must satisfy
The definition in section 2(6) is cumulative. Treat the test as five boxes that must all be checked for the same supply. If one box fails, the supply does not meet the statutory definition of export of services, even when the commercial customer is based abroad.
| Condition | What to establish | What can defeat the condition |
|---|---|---|
| Supplier located in India | Identify the legal person that contracted to provide the service and performed or assumed responsibility for it. | The contracting supplier is not actually located in India, or the Indian entity is only an establishment of another legal person whose role has been misunderstood. |
| Recipient located outside India | Identify the person legally receiving the service, the establishment that receives it, and the contractual and operational evidence for that location. | The service is actually received by an Indian establishment, representative office or other recipient in India. |
| Place of supply outside India | Apply section 13 of the IGST Act, including any service-specific exception, rather than assuming the recipient-location rule. | An exception fixes the place of supply in India, as can happen for an India-based intermediary. |
| Payment in convertible foreign exchange | Show that consideration was received in the form required by the statutory wording applicable to the transaction and reconcile it to the invoice and service period. | The payment is not in the required form. CBIC’s FAQ gives an example where payment from an NRE account in Indian rupees did not satisfy the stated convertible-foreign-exchange condition. |
| Supplier and recipient are not establishments of a distinct person | Determine whether the parties are separate incorporated legal persons or establishments of one company. | The transaction is between establishments of the same legal person, such as relevant branch or representative-office arrangements. |
The fifth condition is not a general ban on transactions within a corporate group. An Indian-incorporated subsidiary and a company incorporated abroad are separate legal persons; the relationship alone does not fail this condition. The other four conditions still have to be met.
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A practical decision sequence
Use the following sequence for each contract, invoice or service stream. Keep the analysis tied to the actual facts rather than to a broad business label such as “IT services” or “consulting.”
1. Identify the supplier, recipient and receiving establishment
Write down the legal name and registration details of the supplier, the person named as customer in the contract, the person liable to pay, and the establishment that actually receives the service. The recipient is not automatically the end user, the Indian audience for an advertisement, or an Indian representative that communicates with the supplier.
For a business recipient, document the place of business or fixed establishment that receives the service. If the recipient has no place of business, document the usual residence relevant under the applicable rule. Use the contract, statement of work, purchase order, correspondence and operational records together; a billing address by itself may not show where the service is received.
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CBIC’s advertising guidance illustrates the distinction. In an own-account advertising arrangement, the foreign client that contracts with and pays the Indian advertising company can be the recipient even when the campaign targets people in India or an Indian representative is involved.
2. Describe what the supplier actually supplies
Separate the deliverable from the customer’s wider business project. Ask whether the Indian entity is supplying a complete service on its own account or arranging another person’s supply. Record who controls performance, who bears responsibility for the result, who contracts with the end customer, and whose invoice describes the underlying service.
Contract labels help, but they do not replace an analysis of performance and commercial substance. A document calling a company a “service provider” does not prevent the arrangement from being intermediary activity if the facts show that it merely arranges or facilitates another supply.
3. Apply the correct place-of-supply rule
Section 13 applies when the supplier or recipient is outside India. Section 13(2) gives the general rule: the place of supply is the location of the recipient. That rule is subject to specific provisions, so identify the service category before relying on it.
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One free scan finds every outdated or missing driver and matches the right update for your exact hardware.Free scan · exact hardware match| Service situation | Why a separate check is needed |
|---|---|
| Services involving goods that must be made physically available | The location where the relevant performance occurs can replace the general recipient-location rule. |
| Services requiring an individual’s physical presence | The place where the service is actually performed can be decisive. |
| Services connected with immovable property | The property location is relevant rather than simply the customer’s address. |
| Admission to, or organisation of, events | The event-related rule can determine the place of supply. |
| Intermediary services | Section 13(8)(b) places the supply at the intermediary’s location. |
| Certain banking and financial services | A service-specific subsection may apply instead of section 13(2). |
| Certain hiring of transport | The Act contains a separate rule for the specified hiring transactions. |
The table is a screening aid, not a substitute for reading the current subsection. If more than one provision appears relevant, document why the provision selected governs the particular service.
4. Test for intermediary status
The IGST Act defines an intermediary as “a broker, an agent or any other person, by whatever name called, who arranges or facilitates the supply of goods or services or both, or securities, between two or more persons, but does not include a person who supplies such goods or services or both or securities on his own account.”
The critical distinction is therefore between a principal supplying the service itself and a person arranging or facilitating someone else’s supply. Section 13(8)(b) places an intermediary service at the supplier’s location. For an India-based supplier, that can put the place of supply in India and stop the transaction from satisfying condition three.
Review these factual indicators together:
- Who is contractually responsible for the promised deliverable?
- Does the Indian entity perform the substantive service, or only connect the customer with another provider?
- Who sets the terms and price of the underlying supply?
- Does another supplier contract with and invoice the customer?
- Is the Indian entity paid for its own service or for arranging a transaction between other persons?
- Are the supposed “support” activities incidental to a principal service, or are they the main supply?
No single label or indicator decides every case. Keep the service description, contracts and actual workflow aligned.
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Map the legal structure, not just the ownership chart. A company incorporated in India and a parent incorporated abroad are separate persons for the distinct-establishments condition. A service from the Indian subsidiary to the foreign parent is not disqualified solely because the companies are in the same group.
That result differs from a transaction between establishments of one company. A branch, project office or representative office can raise the distinct-person issue because it may be an establishment of the same legal person rather than a separately incorporated recipient. Obtain the incorporation and establishment documents needed to make that distinction.
6. Confirm the payment requirement
Under the statutory wording considered here, consideration must be received in convertible foreign exchange. Reconcile the remittance to the contract, invoice number, service period and amount, and preserve the payment record. Do not treat the currency shown on an invoice as proof that the statutory condition was met.
The form of payment can matter even when the payer is connected with the overseas customer. CBIC’s FAQ example treats payment from an NRE account in Indian rupees as failing the stated convertible-foreign-exchange condition. Because payment rules can be amended, verify the wording and any applicable notification for the relevant date.
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7. Record the conclusion before choosing a GST route
Prepare a short transaction memo that states the supplier, recipient, service description, place-of-supply provision, intermediary analysis, legal-person relationship, payment evidence and conclusion on each of the five conditions. A clear file helps when invoices, returns or refund claims are reviewed months later.
How common service models are treated
CBIC clarifications show why the facts of the supply matter more than the industry label.
IT-enabled services and backend work
An ITeS provider that supplies backend services on its own account can qualify as an exporter when all five section 2(6) conditions are met. The same provider may produce a different result if it also arranges or facilitates support services. CBIC states that intermediary status in a mixed arrangement depends on the facts and circumstances, including which set of services is the principal or main supply.
Separate work orders, deliverables and pricing for the provider’s own service and any facilitation activity can make the analysis clearer, but documentation cannot change the substance of what was actually supplied.
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In the scenario addressed by CBIC Circular 230/24/2024-GST, an Indian advertising company contracts with and is paid directly by a foreign client for advertising supplied on its own account. The foreign client is treated as the recipient, and the place of supply appears to follow section 13(2), subject to the other export conditions.
Advertising that only arranges media space
CBIC describes a different arrangement in which the media owner contracts with and invoices the foreign client while the Indian agency merely facilitates the media-space supply. The agency’s service is intermediary service, so section 13(8)(b) places its supply at the agency’s location. The agency cannot reach export treatment simply because the advertiser is overseas.
Brokerage for a non-resident
CBIC’s FAQ applies the intermediary reasoning to brokerage supplied by an India-based stock broker to non-resident clients. The overseas client does not by itself move the place of supply outside India.
Indian subsidiary serving a foreign parent
A separately incorporated Indian subsidiary can satisfy the fifth condition when it supplies services to a foreign-incorporated parent, provided the supplier, recipient, place-of-supply and payment conditions also pass. A branch or representative-office arrangement involving the same company requires a separate analysis and should not be treated as equivalent to a subsidiary.
Own-account service or intermediary: a focused comparison
| Question | Own-account service | Intermediary arrangement |
|---|---|---|
| Who supplies the underlying service? | The Indian entity supplies it to the customer as principal. | Another person supplies the underlying goods or services; the Indian entity arranges or facilitates the transaction. |
| Who is responsible to the customer? | The Indian entity is responsible for its contracted deliverable. | The underlying supplier is responsible for the service being arranged, while the Indian entity provides facilitation. |
| Typical place-of-supply analysis | Start with section 13(2), then test every specific exception. | Section 13(8)(b) generally places the intermediary service at the supplier’s location. |
| Effect for an India-based supplier | Place of supply may be outside India if the applicable rule points to the foreign recipient and the other conditions pass. | Place of supply can remain in India, preventing export classification. |
This comparison is not a safe-harbour checklist. The classification follows the actual contract and conduct, including the principal or main supply where a bundle contains both substantive service and facilitation.
After classification: invoice, LUT or bond, and refunds
Classification answers whether the supply is an export. Compliance steps answer how to report and support that treatment. Complete the classification first.
Invoice wording
For the route that uses a bond or Letter of Undertaking (LUT) without payment of integrated tax, CBIC invoice rules prescribe the endorsement:
SUPPLY MEANT FOR EXPORT UNDER BOND OR LETTER OF UNDERTAKING WITHOUT PAYMENT OF IGST
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Use the prescribed wording and the other invoice particulars required for the transaction. Do not use the endorsement merely because the customer is abroad; the five-condition test must support it.
LUT or bond route
CBIC states that an exporter making an export of services without payment of integrated tax must comply with section 16(3) of the IGST Act and Rule 96A by furnishing an LUT or bond. Check the current procedural requirements, validity and filing records for the period in question, and retain proof that the selected route was available when the supplies were made.
Input-tax-credit refund
CBIC refund rules contain a calculation for refund of input tax credit relating to qualifying zero-rated supplies made without payment under bond or LUT. Eligibility depends on the applicable provisions, documentary support and procedural conditions. Reconcile the invoices and tax records used in a claim to the services that passed the export test; a refund calculation cannot cure a failed classification.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Evidence file: what to retain
A defensible file should let a reviewer follow the transaction from contract to payment. Retain, as applicable:
- The signed contract, statement of work, purchase order and amendments.
- The supplier’s and recipient’s legal names, incorporation details and relevant establishment information.
- A description of deliverables, where the work was performed, and who received the output.
- Documents showing which establishment received the service and why that establishment is outside India.
- The place-of-supply analysis identifying section 13(2) or the specific exception used.
- Records showing whether the Indian entity supplied on its own account or facilitated another supplier’s service.
- Invoices carrying the applicable export endorsement when the bond or LUT route is used.
- LUT or bond records and proof of compliance with the selected route.
- Payment records tied to the invoice and service period, with the currency and remitter details visible.
- Workpapers supporting any input-tax-credit refund claim.
Common failure points and how to correct them
| Observed problem | Why it matters | Corrective action |
|---|---|---|
| “The customer is foreign, so it is an export.” | Overseas customer status proves only part of one condition and says nothing about place of supply or intermediary status. | Complete all five tests for the specific service and retain the analysis. |
| Foreign-currency invoice but no matching receipt evidence. | The statutory payment condition concerns receipt, not the currency printed on an invoice. | Reconcile the actual receipt to the invoice and verify the applicable payment wording for the period. |
| Using section 13(2) without checking exceptions. | A special rule can move the place of supply to India or another location. | Classify the service first and cite the subsection that governs it. |
| Calling an agency an “exporter” while another supplier invoices the customer. | The agency may be arranging or facilitating a supply and therefore be an intermediary. | Map each contract and invoice, then test section 13(8)(b). |
| Treating a subsidiary and a branch as the same case. | A subsidiary is a separate legal person; a branch can be an establishment of the same company. | Verify incorporation and establishment status before applying condition five. |
| Using the export invoice endorsement before resolving classification. | Invoice wording does not create export status and can create a mismatch in records. | Document the five-condition conclusion first, then select the compliant GST route. |
| Claiming input-tax-credit refund without proving the underlying supply. | Refund eligibility follows the qualifying zero-rated supply and its procedural rules. | Link the claim to the export invoices, LUT or bond records and supporting tax records. |
Worked examples
Example 1: Indian software team delivering a defined project to a foreign customer
An Indian company contracts directly with a company incorporated abroad to design and maintain software. The Indian company is responsible for the deliverables, the foreign company receives the service, section 13(2) applies because no specific exception is indicated, payment is received in the required convertible foreign exchange, and the parties are separate legal persons. On those stated facts, all five conditions can be satisfied. The company must still verify the current payment and procedural rules and maintain its contract, place-of-supply and receipt evidence.
Example 2: Indian agency arranging advertising purchased from a media owner
A foreign advertiser contracts with and is invoiced by the media owner. An Indian agency only negotiates placement and facilitates the transaction. The agency is supplying facilitation between two other persons. Section 13(8)(b) points the agency’s place of supply to India, so the agency’s fee does not qualify as an export merely because the advertiser is outside India.
Example 3: Indian subsidiary serving its foreign parent
An Indian-incorporated subsidiary provides accounting support under a service agreement to its foreign-incorporated parent. The companies are separate legal persons, so condition five is not failed solely because they share ownership. The subsidiary must separately establish the parent’s recipient location, apply the correct section 13 rule, receive payment in the required form and avoid intermediary character.
Example 4: Payment credited in Indian rupees from an NRE account
A foreign customer instructs payment from an NRE account, but the supplier receives Indian rupees. The payment form described in CBIC’s FAQ does not meet the stated convertible-foreign-exchange condition. The supplier should not treat the transaction as an export without checking whether a later amendment or applicable rule changes that result for the relevant date.
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- Name the Indian supplier that is contractually responsible.
- Name the legal recipient and identify the establishment that receives the service.
- Describe the actual deliverable and decide whether the Indian entity acts on its own account.
- Identify the section 13 place-of-supply rule and test all relevant exceptions.
- Check for intermediary activity, including any facilitation bundled with the principal service.
- Confirm whether the parties are separate legal persons or establishments of one person.
- Verify receipt of consideration in the form required by the applicable statutory wording.
- Record the evidence supporting each conclusion.
- Only after classification, choose the invoice, LUT or bond and refund procedures that apply.
- Recheck amendments, notifications and procedural requirements for the transaction date.
If any answer is uncertain, isolate that issue rather than assuming the entire supply is an export. A service can be commercially international while failing one statutory condition.
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