GST Export of Services Reforms 2026: New Proposals for IT Firms and Exporters
The 57th GST Council recommended amending Section 2(6) of the IGST Act to remove restrictions that disqualified cross-border services between Indian parent companies and foreign branch establishments from being treated as exports. It also proposed repealing Section 13(3)(a) to apply the default recipient-location rule for services on client-supplied goods, and clarified zero-rating for SEZ and Free Trade Warehousing Zone (FTWZ) supplies.
Published Date: 8 October 2026
Editorial Review: Akash P R, Business Consultant (10 Years+ Experience in Startup Consultancy, Direct Tax, Indirect Tax and Compliances), D BIZ CONSULTANCY PVT. LTD.
News Summary & Quick Answer
Indian information technology exporters, engineering consulting firms, and shared service centers frequently face tax disputes over whether cross-border service deliveries qualify as zero-rated exports. Resolving key structural uncertainties, the 57th GST Council recommended amending Section 2(6) of the IGST Act to remove the restriction preventing services between Indian establishments and overseas branches from qualifying as exports, while rationalizing place-of-supply rules for services performed on foreign-supplied equipment.
Key Cross-Border Tax Reforms
| Export Provision | Historical Regulatory Ambiguity | Proposed 57th Council Amendment |
|---|---|---|
| Export Definition (Sec 2(6)) | Services between distinct establishments of the same entity disqualified from export status | Proposed removal of restriction for qualifying cross-border transactions |
| Place of Supply (Sec 13(3)(a)) | Services performed on goods made available by foreign clients treated as supplied at physical location | Removal of Sec 13(3)(a); default recipient-location rule applies under Sec 13(2) |
| SEZ & FTWZ Transactions | Ambiguity regarding zero-rating when overseas buyers take delivery in SEZ | Explicit clarification affirming zero-rated treatment |
Strategic Significance for IT & Tech Hubs in Kerala
1. Significant Boost for Technopark & Infopark IT Exporters
Companies operating in Technopark Trivandrum and Infopark Kochi that bill international branches or parent entities will benefit from clearer zero-rated classification, safeguarding export refunds and eliminating 18% IGST liability disputes.
2. Unlocking Global Engineering & Testing Contracts
Specialized firms providing R&D, structural analysis, or software calibration on foreign hardware components shipped temporarily to India will no longer have place of supply pinned to the domestic laboratory, qualifying these services as genuine exports.
3. Clearer Free Trade Warehousing Zone Operations
Warehousing logistics hubs and manufacturing exporters in Kerala's Special Economic Zones can transact with global buyers with unambiguous zero-rated status.
Practical Example: Software Engineering Lab in Kochi
An embedded-systems design firm in Infopark Kochi tests prototype automotive hardware sent by a client headquartered in Germany:
- Under Existing Section 13(3)(a): Because the services were performed on physical goods made available in Kochi, the place of supply was deemed to be India, exposing the export to 18% GST.
- Under Proposed Reform: The repeal of Section 13(3)(a) allows the general rule (Section 13(2)) to apply. The place of supply shifts to the recipient's location in Germany, qualifying the contract as a zero-rated export with full refund eligibility.
Explore Related Coverage:
Frequently Asked Questions
Practical answers to common business questions regarding this statutory update.
Akash P R
Business Consultant
10 Years+ Experience in Startup Consultancy, Direct Tax, Indirect Tax and Compliances
D BIZ CONSULTANCY PVT. LTD.
Have questions about this compliance update or require assistance with filing before the due date? Connect directly with our advisory desk:
TC No 44, 913, Cotton Hill Rd, Cotton Hill, Vazhuthacaud, Trivandrum 695014.
Plus Code: GX39+M6 Thiruvananthapuram, Keralam
Koprambil Heights, Seaport-Airport Rd, Irumpanam, Thrippunithura, Kochi.
Other Regulatory Bulletins
57th GST Council Meeting 8 October 2026: Key Decisions and Business Impact
8 OctTax & GSTGST Arrest Powers Proposed to End: ₹5 Crore Prosecution Threshold Explained
8 OctTax & GSTGST Refund Reforms 2026: Automated Processing and Impact on Business Cash Flow
8 OctTax & GSTGST ITC Changes 2026: Insurance, Catering, Capital Goods and Blocked Credits
8 OctTax & GSTGST Registration and Cancellation Reforms 2026: New Business Benefits Explained
8 OctAvoid Penalties Under Income Tax & MCA with D BIZ
Whether you require Tax Audit Form 3CA/3CB filing by 21 October, Corporate ITR filing by 21 November, or AGM and DIR-3 KYC compliance, our multi-disciplinary team in Thiruvananthapuram and Ernakulam guarantees timely execution.