GST Export of Services: What Has Been Recommended?
The 57th GST Council meeting, held on 8 October 2026, recommended a change to the place of supply provisions under Section 13 of the Integrated Goods and Services Tax (IGST) Act, 2017.
The recommendation concerns services for which goods are required to be physically made available to the service provider in India.
Examples include testing, repair, research and development (R&D), and clinical trial services provided in situations where the relevant goods are made available in India but the customer is located outside India.
The Council recommended omitting Section 13(3)(a) so that these services would generally fall under the default place of supply rule in Section 13(2), subject to the final legal provisions and any applicable exceptions.
The proposed change aims to address situations in which Indian service providers may be unable to obtain export treatment merely because the services are physically performed in India.
What Is the Existing Place of Supply Rule?
Section 13 of the IGST Act determines the place of supply of services where the supplier or recipient is located outside India, subject to the applicable statutory provisions.
Under Section 13(3)(a), the place of supply for services requiring goods to be physically made available to the supplier is generally the location where the services are actually performed.
For example, where equipment belonging to an overseas customer is brought to India for testing or repair, the place of supply may be considered to be India under the existing provision.
This can create difficulties for businesses seeking to treat such transactions as exports of services, even where the customer is overseas and payment is received in foreign exchange or another permitted manner.
What Change Has the GST Council Proposed?
The Council recommended omitting Section 13(3)(a) of the IGST Act.
Under the proposed approach, the affected services would generally be governed by the default rule under Section 13(2), under which the place of supply is the location of the recipient of services, subject to applicable exceptions and the final amendment.
If implemented as recommended, this may improve the ability of eligible Indian service providers to qualify for export treatment when serving customers located outside India.
Which Businesses May Benefit?
The proposed change may be relevant to Indian businesses providing services to overseas customers, including:
1. Testing and Inspection Service Providers
Businesses that test, inspect or examine goods in India for customers located abroad may benefit if the transactions satisfy the applicable export-of-services conditions.
2. Repair and Maintenance Service Providers
Indian businesses undertaking repair or similar work on goods belonging to overseas customers may find the revised place of supply treatment beneficial, subject to the final provisions.
3. Research and Development Businesses
Companies carrying out qualifying R&D activities involving goods made available in India by overseas customers may be affected by the proposed amendment.
4. Clinical Trial Service Providers
Businesses providing clinical trial or related services for overseas customers may also need to review the proposed change in the place of supply framework.
The actual impact will depend on the nature of the service, contractual arrangements and the applicable statutory conditions.
Illustrative Example
Suppose an overseas company sends specialised equipment to an Indian laboratory for testing.
The Indian laboratory performs the testing in India and invoices the overseas customer.
Under the existing framework described in the GST Council FAQ, Section 13(3)(a) may treat the place of supply as the location where the testing is performed.
The Council has recommended omitting this provision so that the default rule under Section 13(2) may apply.
If implemented as recommended, the place of supply in this example may generally be the location of the overseas recipient, subject to the final legal provisions and applicable exceptions.
This could support export treatment if all the conditions for export of services are independently satisfied.
Will Every Service Provided to a Foreign Client Qualify as an Export?
No. A change in the place of supply provision would not automatically make every service provided to a foreign customer an export of services.
The conditions under Section 2(6) of the IGST Act must still be examined. These include:
-
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 applicable rules.
-
The supplier and recipient are not merely establishments of the same person in the circumstances covered by the statutory definition.
The applicable law and the nature of the transaction must be examined before treating a supply as an export of services.
What Should Indian Service Providers Do Now?
Businesses providing services to overseas customers should:
-
Review contracts involving testing, repair, R&D and clinical trial services.
-
Identify transactions in which goods are physically made available to the Indian service provider.
-
Maintain contracts, invoices, work reports and supporting documents.
-
Review the place of supply and export-of-services conditions for each transaction.
-
Monitor the official amendment to Section 13 of the IGST Act before changing the GST treatment of their supplies.
-
Obtain appropriate professional advice before claiming export benefits or related refunds.
Conclusion
The GST Council has recommended omitting Section 13(3)(a) of the IGST Act, which deals with certain services requiring goods to be physically made available to the supplier.
If implemented as recommended, the change may help eligible Indian service providers serving overseas customers by allowing the default place of supply rule under Section 13(2) to apply.
However, the proposal does not automatically convert every service provided to a foreign customer into an export. Businesses must continue to examine all statutory conditions and verify the formal amendment before relying on the proposed treatment.
Source: Ministry of Finance, Government of India — FAQs on reforms for enhancing export competitiveness, issued in connection with the recommendations of the 57th GST Council meeting held on 8 October 2026.