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Usually, services supplied by an Indian company to its own unincorporated overseas branch do not qualify as exports under Indian GST. The branch and the Indian company are establishments of the same legal person, so the supply fails one of the five cumulative export conditions. A separately incorporated foreign company is a different person and is not barred on that ground alone—but the other export conditions must still be met.
Start with the five export conditions
Under section 2(6) of the Integrated Goods and Services Tax Act, 2017 (IGST Act), a service is an export only when all five conditions are satisfied:
- The supplier of the service is located in India.
- The recipient is located outside India.
- The place of supply is outside India.
- The supplier receives payment in convertible foreign exchange.
- The supplier and recipient are not merely establishments of a distinct person under Explanation 1 to section 8.
These are cumulative requirements: if even one fails, the service does not meet the statutory definition of export. The overseas recipient’s location alone is not enough. The IGST Act governs the test; review the current statutory text and transaction-specific rules before reaching a tax conclusion.
Determine whether the overseas operation is a branch or a separate company
The key question is whether the overseas operation is part of the same legal person as the Indian supplier, or a separately incorporated entity. Section 8 of the IGST Act treats a person’s establishments in India and abroad as establishments of distinct persons; it also recognizes a branch or agency as an establishment of the person carrying on business through it.
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| Overseas recipient | Effect on export condition five | What else must be checked |
|---|---|---|
| The Indian company’s own unincorporated branch, agency, or representative office | Fails: the parties are establishments of the same person treated as distinct establishments. CBIC Circular 161/17/2021-GST says the supply cannot be treated as an export. | Determine whether a supply exists and apply the relevant place-of-supply and other GST rules. |
| A separately incorporated foreign company | Not disqualified by the distinct-establishment condition alone. The Indian company and foreign body corporate are separate persons. | Verify all five export conditions, including place of supply and payment in convertible foreign exchange. |
CBIC Circular 161/17/2021-GST, dated 20 September 2021, addresses both directions: a foreign company’s Indian branch supplying the foreign company’s overseas establishment, and an Indian company supplying its own unincorporated overseas branch, are supplies between distinct establishments and are not exports under section 2(6)(v). By contrast, a supply to a separately incorporated foreign company may qualify if the other statutory conditions are met. See the CBIC circular.
Check the legal person named in the contracts, invoices, registrations, and corporate records. A shared group name or ownership relationship does not by itself make a foreign subsidiary a branch of the Indian company.
Check whether there is a supply even when no fee is charged
No intercompany fee does not automatically mean there is no supply for GST purposes. Section 7 of the Central Goods and Services Tax Act (CGST Act) includes certain activities listed in Schedule I even when they are made without consideration. Schedule I covers supplies between related or distinct persons in the course or furtherance of business. CBIC’s sectoral FAQ also says services between distinct entities can constitute supplies without consideration.
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Keep the questions separate: first determine whether the arrangement is a supply, then assess whether it meets the export definition and the applicable place-of-supply rules. The relevant references are the CGST Act and the CBIC sectoral FAQ.
Classify the service and establish its place of supply
Identify what the provider actually does and which establishment is most directly concerned with providing and receiving the service. The place-of-supply rule depends on the service; some services have special rules. In particular, intermediary treatment can affect whether the place of supply is outside India.
Do not treat every support service as intermediary work
An intermediary generally arranges or facilitates a supply between other persons rather than providing its own service on its own account. Whether a provider is an intermediary depends on the facts and the principal or main supply. Do not classify back-office, support, or technology work as intermediary services solely because it supports another business.
CBIC Circular 107/26/2019-GST explains the factual inquiry and clarifies that an ITeS provider that is not an intermediary may claim export treatment if it satisfies section 2(6). The circular and CBIC sectoral FAQ provide relevant guidance. Apply the rule for the service actually supplied rather than assuming the general rule controls.
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Apply the test to the transaction records
- Name the legal parties. Identify the supplier and recipient as legal persons, not only as business units or trade names.
- Confirm the overseas entity’s status. Establish whether it is the Indian company’s unincorporated branch, agency, or representative office, or a separately incorporated foreign company.
- Describe the service. Record what was performed, by whom, and for which establishment; assess whether the supplier acts on its own account or facilitates another person’s supply.
- Determine the place of supply. Apply the rule for that service and assess any relevant special rule, including intermediary treatment.
- Verify location and payment. Confirm the supplier is located in India, the recipient is outside India, and payment is received in convertible foreign exchange.
- Assess supply and export status separately. Consider whether the arrangement is a supply even if no fee is booked, then test all five section 2(6) conditions. State precisely which condition fails if the transaction does not qualify.
The conclusion depends on the particular legal entities, service, place-of-supply facts, and payment evidence. Confirm the current statutory text and any applicable notifications when assessing a live transaction.
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