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Under Indian GST, a foreign sponsor does not automatically make clinical-trial services an export. An Indian supplier must meet all five conditions in the IGST Act’s export-of-services definition, including that the place of supply is outside India. A domestic sponsor cannot meet the condition that the recipient be outside India, so the export route is unavailable; the applicable domestic GST depends on the supply’s classification and the locations of the supplier and recipient.
How overseas and domestic sponsor arrangements compare
| Question | Overseas sponsor | Domestic sponsor |
|---|---|---|
| Is the recipient outside India? | Potentially; confirm the recipient’s location and whether the parties are establishments of a distinct person. | No. The recipient-outside-India condition for export is not met. |
| Can the service qualify as an export? | Only if all five export-of-services conditions are satisfied. A foreign sponsor alone is insufficient. | No, not under the export-of-services definition, because the recipient is in India. |
| What determines place of supply? | The service and arrangement matter, including whether the sponsor makes goods physically available to the Indian supplier. The Maharashtra AAR applied IGST Act Section 13(3)(a) to the facts before it. | Determine the applicable place-of-supply rule for the actual service; the overseas-sponsor ruling does not decide domestic arrangements. |
| What tax may apply? | If the supply qualifies as an export, it is zero-rated subject to applicable requirements. If it does not, domestic GST may apply; whether CGST plus SGST or IGST is payable depends on the applicable classification and locations. | Domestic GST treatment applies. Whether CGST plus SGST or IGST is payable depends on the applicable classification and supplier/recipient locations. |
| What rate is indicated for research and development services? | The CBIC GST rates schedule lists research and development services under heading 9981 at 9% central tax plus 9% state tax, or 18% integrated tax as applicable. Confirm that the specific supply falls under this entry and check current notifications. | |
Does a foreign sponsor make clinical research an export of services?
No, not by itself. Under Section 2(6) of the Integrated Goods and Services Tax Act, export status requires all of the following conditions to be met:
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- 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 wherever permitted by the Reserve Bank of India.
- The supplier and recipient are not merely establishments of a distinct person under the statutory explanation.
These conditions are cumulative. A foreign address for the sponsor or payment in foreign currency does not resolve the place-of-supply test or satisfy the other conditions by itself. CBIC’s Sectoral FAQs describe the export conditions and zero-rating guidance.
When a service meets the export definition, it is zero-rated. CBIC describes routes that include supplying under a bond or letter of undertaking and claiming an eligible input-tax-credit refund, or paying integrated tax and seeking a refund, subject to applicable requirements.
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What the Cliantha Research ruling decided
In its order dated 4 May 2019, the Maharashtra Authority for Advance Ruling considered Cliantha Research Limited’s proposed clinical research and support services for entities in India and abroad from Maharashtra. In the arrangement described, the overseas sponsor supplied investigational goods, which were made physically available for services performed in India.
The authority applied IGST Act Section 13(3)(a), treated the place of supply as India, and concluded that the described services did not qualify as exports under Section 2(6). Because the supplier was in Maharashtra and the place of supply was also in Maharashtra, it found CGST and SGST payable on those facts.
This is a fact-specific advance ruling concerning its applicant and the arrangement presented, not a universal ruling that every clinical trial for a foreign sponsor is subject to CGST and SGST. For another contract, assess what goods, if any, the sponsor makes physically available; what work the Indian supplier performs and where; the type of service supplied; the recipient’s location; and whether the parties are distinct establishments. The applicable place-of-supply rule may depend on those details.
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A domestic recipient does not meet the export condition that the recipient be located outside India. That rules out the export-of-services route, but does not by itself establish the tax classification, rate, or whether the supply is intra-State or inter-State.
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The CBIC rates schedule lists “Research and development services” under heading 9981 at 9% CGST plus 9% SGST, or 18% IGST as applicable. This is an indicative rate entry, not a classification ruling for every clinical-trial service. Confirm the classification of the contracted supply and the current rate entry or notifications before applying it.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Practical checks before invoicing
- Identify the actual recipient and establish where it is located; check whether the supplier and recipient are establishments of a distinct person.
- Describe the contracted work precisely, including research, testing, support, and any separately supplied services.
- Record whether the sponsor provides investigational goods, whether they are physically made available to the supplier, and where the supplier performs the work.
- Determine the place of supply under the rule applicable to those facts, rather than inferring it from the sponsor’s country.
- For a claimed export, verify every Section 2(6) condition, including the permitted payment method, and follow the applicable zero-rating and refund requirements.
- Confirm classification and current rate, then determine whether CGST plus SGST or IGST applies based on the supplier’s location and place of supply.
The cited CBIC rate schedule and the 2019 Maharashtra AAR order should be checked against current law and notifications before being applied to a particular contract.
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