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Fix the driver behind crashes, sound loss and screen glitchesFind Drivers →Repair Windows errors before they cause bigger problemsFix Now →Scan for outdated or missing drivers - takes under a minuteDriver Scan →Usually, services supplied by an Indian company to its own unincorporated overseas branch do not qualify as exports under Indian GST. The branch and the Indian office are establishments of the same legal person, so the transaction fails one of the five cumulative requirements in the export definition. A separately incorporated foreign company is different: the distinct-establishment rule alone does not bar export treatment, but all the other requirements must still be met.
The answer depends on who the legal parties are, what service is provided, where its place of supply falls, and how payment is received. The term “overseas branch” is not enough to establish the tax result.
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Start with the five statutory export conditions
Under section 2(6) of India’s Integrated Goods and Services Tax Act, 2017 (IGST Act), a service is an export only when all five conditions below are satisfied. If any one fails, the supply does not meet the statutory definition of export of services.
- 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 for the service in convertible foreign exchange.
- The supplier and recipient are not merely establishments of a distinct person under Explanation 1 to section 8 of the IGST Act.
The fifth condition is central to the branch question, but it does not replace the other four. An overseas recipient does not, by itself, make a service an export. Read the IGST Act, including sections 2(6) and 8.
First establish whether the overseas operation is a branch or a separate company
Section 8 treats a person’s establishments in India and outside India as establishments of distinct persons. It also treats a person carrying on business through a branch or agency in a territory as having an establishment there. For the export test, the key question is whether the Indian supplier and overseas recipient are establishments of the same legal person.
| Overseas recipient | Effect on the export test | What still needs checking |
|---|---|---|
| An unincorporated branch, agency, or representative office of the Indian company | The Indian company and its overseas operation are establishments of the same person. Under section 2(6)(v), the supply does not qualify as an export. | Whether there is a supply and the GST treatment that applies; the export definition is not met because the distinct-establishment condition fails. |
| A foreign company separately incorporated under the law of its country | It is a separate person from the Indian company. This distinct-establishment condition alone does not prevent export treatment. | All other section 2(6) conditions, including supplier and recipient location, place of supply, and qualifying payment. |
CBIC Circular 161/17/2021-GST, dated 20 September 2021, directly addresses the distinction. It says that services between an Indian company and its own overseas branch, agency, or representative office—which is not incorporated under local law—cannot be treated as exports. It also explains that a separately incorporated Indian company and foreign body corporate are separate persons; their supply may qualify as an export if the other statutory conditions are satisfied. Read CBIC Circular 161/17/2021-GST.
How to verify the legal identity
Check the contracts, invoices, registrations, and corporate records to identify the actual legal person on each side. A trade name, office location, or group-company relationship does not establish whether the overseas operation is a branch or a separate company. The distinction is between an establishment of the same person and a separately incorporated legal person—not simply between related and unrelated businesses.
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Check whether the arrangement is a supply even if no fee is charged
Do not conclude that a branch-to-branch arrangement falls outside GST solely because no intercompany fee is booked. Section 7 of the Central Goods and Services Tax Act (CGST Act) includes certain Schedule I activities as supplies even without consideration. Schedule I covers supplies between related or distinct persons when made in the course or furtherance of business. CBIC’s sectoral FAQ likewise recognizes that services between distinct entities can be supplies without consideration.
This is a separate question from export status: first assess whether the activity is a supply, then apply the export definition and relevant place-of-supply rules. See the CGST Act, including section 7 and Schedule I and CBIC’s sectoral FAQ.
Identify the service and determine its place of supply
The place-of-supply condition depends on the service actually performed and the rule applicable to it. Identify the service and the parties for whom it is performed before deciding where its place of supply lies. Some services have specific rules that can change the result.
Consider whether the supplier is an intermediary
Do not classify every support, back-office, or technology service as an intermediary service. The relevant question is whether the supplier provides its own service on its own account, or arranges or facilitates a supply between other persons. The principal or main supply and the transaction’s facts and circumstances matter.
CBIC Circular 107/26/2019-GST explains the intermediary analysis and says that an information technology-enabled services (ITeS) supplier acting on its own account, rather than as an intermediary, can receive export benefits if it meets the section 2(6) criteria. Conversely, the CBIC sectoral FAQ notes that certain intermediary services provided to offshore clients have their place of supply at the supplier’s location. If that rule puts the place of supply in India, the service fails the export definition’s place-of-supply condition. Apply the rule only after establishing that the service is intermediary in character. Read CBIC Circular 107/26/2019-GST.
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Use this sequence to assess a transaction
- Name the legal parties. Identify the supplier and recipient as legal persons, not merely departments, offices, or trade names.
- Classify the overseas operation. Determine whether it is an unincorporated branch, agency, or representative office of the same company, or a separately incorporated foreign company. Use contracts, registrations, and corporate records.
- Describe the actual service. Establish what work is performed and which establishment is most directly involved in providing and receiving it.
- Determine the place of supply. Apply the rule for the identified service and examine any applicable special rule, including whether the supplier is acting as an intermediary.
- Verify the remaining statutory facts. Confirm the supplier is located in India, the recipient outside India, and payment is received in convertible foreign exchange.
- Assess supply separately from export status. Consider whether the activity is a supply even if no charge is recorded, including under Schedule I.
- State the result by condition. Treat the service as an export only if all five section 2(6) requirements are met. If it does not qualify, identify the specific failed condition rather than relying on the label “overseas branch.”
What the answer does—and does not—establish
The branch-versus-company distinction resolves only the distinct-establishment part of the test. It does not determine the outcome for a particular transaction without facts about the service, the parties’ locations, place of supply, and payment. Before applying the conclusion to a transaction, check the current statutory text, applicable notifications, service-specific place-of-supply rule, corporate identity, and payment evidence.
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