Finance Bill 2026 Proposes GST Relief For Intermediaries By Treating Services To Overseas Clients As Exports
Parul Bose
1 Feb 2026 5:38 PM IST
The Finance Bill, 2026, proposes a key change in the GST treatment of certain cross-border services, especially those provided by Indian intermediaries to overseas clients.
Under the current GST regime, the place of supply for cross-border services is governed by Section 13 of the Integrated Goods and Services Tax (IGST) Act, 2017. This section applies when either the supplier or the recipient of a service is located outside India.
At present, Section 13(8)(b) of the IGST Act lays down a special rule for intermediary services. It treats the place of supply as the location of the supplier, which in most cases is in India. Because of this, even services provided by Indian intermediaries to foreign customers are treated as supplied within India.
As a result, many Indian service providers have had to pay GST on services rendered to overseas clients. These services also did not qualify as exports under GST law, which meant that exporters could not claim export-related benefits.
The Finance Bill, 2026, proposes to remove this special rule by omitting Section 13(8)(b). Once this provision is removed, intermediary services will be governed by the general rule under Section 13(2) of the IGST Act.
Section 13(2) sets out the default principle for cross-border services. It provides that the place of supply is the location of the service recipient, unless a specific rule applies.
With the omission of Section 13(8)(b), this general rule will apply to intermediary services as well. This means that when an Indian intermediary provides services to a customer located outside India, the place of supply will be outside India.
Subject to fulfillment of other export conditions under GST law, such services can then qualify as exports. This would remove them from the GST net in India and allow service providers to claim export-related benefits.
The proposed change follows a recommendation of the GST Council and is aimed at easing compliance and reducing disputes for Indian service providers engaged in cross-border transactions.
This move follows the 56th GST Council's trade facilitation measure for exporters of such services to claim export benefits.
Several call centres and BPO service providers had sought clarity on whether Information Technology Enabled Services rendered to overseas clients could be treated as “intermediary services” and whether such services qualify as exports. From time to time, the CBIC has issued clarifications on the scope of intermediary services.
In 2023, the Bombay High Court, in a split verdict, upheld the validity of Section 13(8)(b) of the IGST Act but held it inapplicable for the levy of CGST and SGST on intra-State intermediary services.
Recently, CESTAT Delhi took note of precedents which have held that providing data hosting services to Amazon Web Services, Inc. USA using own infrastructure and resources, would amount to 'Export of Services' and not 'Intermediary Services'.