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An overseas sponsor does not, by itself, make an Indian clinical-trial service an export. For a cross-border service, the general rule in section 13(2) of the Integrated Goods and Services Tax Act, 2017 (IGST Act) places the supply where the recipient is located, unless a statutory exception or a notification applies. Export status is a separate test: all five conditions in section 2(6) must be met. For pharmaceutical-sector research and development (R&D), check the precise scope of Notification No. 4/2019-Integrated Tax before reaching a conclusion about a particular trial.
What does place of supply decide?
Place of supply is one part of the GST analysis for a service supplied across borders. It is not the same question as whether the service qualifies as an export. A place of supply outside India is necessary for export-of-services status, but it does not establish that status on its own.
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The service contract, the work actually performed, the establishments receiving it, payment arrangements and any group-company relationship all matter. A label such as “clinical trial” or “CRO services” is not enough to determine the result.
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1Fix the driver behind crashes, sound loss and screen glitches2Repair Windows errors before they cause bigger problems3Scan for outdated or missing drivers - takes under a minuteWho is the supplier, and which establishment receives the service?
Start by identifying the legal person supplying each service and the legal person receiving it. The sponsor’s overseas incorporation or the name on a contract may not settle which establishment is the recipient. Under IGST Act sections 2(14) and 2(15), the relevant locations are determined using statutory rules for the recipient and supplier, including the place of business or fixed establishment concerned.
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For the recipient, establish which office or establishment is most directly concerned with the service. Record who contracted for it, who directs the work, who receives and uses the deliverables, and whether an Indian establishment of the sponsor is involved. For the supplier, identify the entity and establishment responsible for the service rather than relying only on the group brand or site location.
How does the general cross-border rule work?
Section 13 applies when the supplier or recipient is outside India. Under section 13(2), the place of supply for services not covered by the listed exceptions or a notified rule is the location of the recipient. The Act states that it “shall be the location of the recipient of services.”
Section 13 also contains exceptions for specified services, including certain services to individuals, services related to immovable property, event-related services and intermediary services. A section 13(13) notification can prescribe a rule for specified services. The right analysis is therefore: identify the service and recipient first, then check whether a more specific rule displaces section 13(2).
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Do clinical-trial activities in India make the place of supply India?
Not automatically. Section 13(3)(b) addresses a service supplied to an individual that requires that individual’s physical presence with the supplier. The statutory focus is on the recipient and the nature of the service, not merely on where an activity happens.
Participant-facing procedures
A medical procedure supplied to a trial participant may need to be analysed separately from the sponsor-facing services. Identify who receives that procedure and whether it requires the individual’s presence with the supplier.
Sponsor-facing CRO or research work
Trial management, protocol or data work, laboratory testing, site coordination and recruitment may form part of a contractual service to a sponsor, depending on the actual arrangement. Do not infer that the sponsor-facing service is supplied to each participant simply because participants undergo procedures at Indian sites. Nor should the participant-facing work be folded into the sponsor service without examining the contract and invoicing.
Could the pharmaceutical R&D notification apply?
CBIC’s Integrated Tax Notifications index lists Notification No. 4/2019-Integrated Tax, dated 30 September 2019, as a section 13(13) notification concerning the place of supply of pharmaceutical-sector R&D services. That makes its operative wording important when a clinical-trial engagement involves pharmaceutical R&D.
The available CBIC-linked PDF could not be opened, so its exact service list, conditions and operative scope cannot be confirmed here. Do not assume that every clinical trial is covered or state a specific notification-based place-of-supply result without checking an authoritative copy and any amendments. The index also lists Notification No. 2/2020-Integrated Tax, dated 26 February 2020, as an amendment to Notification No. 4/2019 concerning B2B maintenance, repair and overhaul (MRO) services; that distinct subject does not establish the rule for clinical-trial services.
When can a CRO be treated as an intermediary?
Section 2(13) defines an intermediary to include a broker, agent or other person who arranges or facilitates a supply between two or more persons. It excludes a person supplying the relevant goods or services on its own account. Under section 13(8)(b), the place of supply of intermediary services is the supplier’s location; the Act says it “shall be the location of the supplier of services.”
Coordination alone does not settle the classification. Consider whether the CRO is providing its own contracted research or trial-management service, or instead arranging or facilitating a supply between other parties. Examine the principal service, the contractual relationships, who is responsible for the deliverables and how the parties invoice and pay. The consequences can differ materially if the intermediary rule applies.
What must be true for the service to qualify as an export?
Section 2(6) sets five cumulative conditions. All must be satisfied:
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Clear out junk files and repair common Windows errorsFree Scan →Scan for outdated or missing drivers - takes under a minuteDriver Scan →- 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 the Act.
Accordingly, a foreign sponsor’s identity is not a substitute for checking the actual recipient, applicable place-of-supply rule, payment evidence and relationship between the parties. CBIC’s FAQ restates the export conditions and discusses how supplier and recipient locations are determined.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.How should offshore subcontracting be treated?
An Indian provider may contract with a foreign customer for an overall service while engaging a separate overseas provider for part of the work. CBIC Circular No. 78/52/2018-GST discusses a fact-specific outsourcing arrangement: in the circumstances described, it treats the Indian exporter’s supply as covering the full contract value and addresses an import of services by the Indian exporter for the outsourced portion. It also considers direct payment by the foreign customer to the offshore subcontractor, subject to the circular’s stated reverse-charge and Reserve Bank of India conditions.
That circular is not a clinical-trial-specific ruling. Use it only where the arrangement is materially similar, and check whether later legal developments affect its application. Identify the offshore provider, who contracts with it, who pays it and whether import-of-service or reverse-charge obligations arise; the foreign customer’s involvement does not by itself resolve those issues.
What facts should be assembled before deciding?
- Service scope: Separate, where the contract and invoices support it, trial management, protocol or data work, laboratory testing, participant procedures, recruitment, site coordination and pass-through purchases.
- Parties and establishments: Identify the supplier for each deliverable and the sponsor establishment that actually receives it; determine whether an Indian affiliate is a recipient or has another role.
- Applicable rule: Check the section 13(2) default, relevant exceptions, and whether the precise service falls within the operative scope of Notification No. 4/2019-Integrated Tax.
- Intermediary question: Establish whether the provider supplies on its own account or arranges or facilitates another party’s supply.
- Export evidence: Retain the contract, invoices, evidence of receipt in convertible foreign exchange, recipient-establishment analysis and information about any distinct-person relationship.
- Outsourcing: Document foreign subcontractors, contractual responsibility, payment flows and the potential import-of-service and reverse-charge treatment.
Without the actual agreement, invoices, payment records and group-structure facts, the framework cannot determine the GST treatment of a particular engagement.
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