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NASSCOM, India’s technology industry body, has told the government that GST classification and refund administration are creating friction for IT exporters. The most recent representation in the public record is a 21 May 2025 meeting with the Revenue Secretary. The sources do not identify one specific “disparity”, such as a rate gap, and they give no attributable estimate of what it costs exporters. This article sets out what NASSCOM raised, how export treatment works under CBIC guidance, and what the government changed in 2025.
What NASSCOM has actually raised
NASSCOM’s June 2025 public-policy summary says it met the Revenue Secretary, Ministry of Finance, on 21 May 2025 to discuss tax challenges for technology and e-commerce. Its GST points relevant to exporters were:
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- Intermediary classification. NASSCOM asked for the “intermediary” classification to be removed. In its view, earlier circulars had not stopped IT services from being wrongly treated as intermediary transactions.
- Overseas branch offices. It listed operational complexities for IT/ITeS companies that work through branches abroad.
The same summary also covers food-delivery charges and state registration for e-commerce operators. Those are separate issues. Source: NASSCOM June 2025 summary.
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These are NASSCOM’s positions, not findings. The sources do not show that every IT exporter is charged extra GST or denied refunds, and they put no figure on losses.
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Why intermediary classification matters
An intermediary is generally a party that arranges or facilitates a supply between two others. The classification matters because it changes how the place of supply is determined. If a service is treated as an intermediary service, it may not qualify as an export, even when the customer is abroad. A provider of IT services on its own account is not an intermediary, and the dispute is about borderline cases being classified wrongly. The PIB’s 2025 account of GST reforms says place of supply for intermediary services will be determined by the recipient’s location, to help Indian exporters claim export benefits (PIB). That is a government description of the change. It does not decide any individual dispute.
How export treatment works under CBIC guidance
CBIC’s sectoral FAQ states: “Exports and supplies to SEZ units and SEZ developers are zero-rated in GST.” That applies to software services, subject to the statutory conditions. An overseas customer alone does not establish export status, because the supply must meet the GST definition of export of services. Source: CBIC Sectoral FAQs.
The two refund routes
| Aspect | Pay IGST, claim refund | Export under bond or LUT |
|---|---|---|
| Tax on the export | IGST is paid | No tax paid |
| What is refunded | The IGST paid on the export | Eligible tax on inputs and input services |
| Working-capital effect | Cash is out until the refund arrives | Input credit accumulates until the refund is processed |
| Filing | Electronic claim in the prescribed form with documents on the Common Portal | Same portal route, plus the formula under the refund rules |
Both routes are described in the CBIC FAQ. Which one suits a business depends on its facts, so take advice from a tax professional.
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For the LUT route, the refund rules apply a formula. In simplified terms, it links zero-rated turnover and eligible net ITC to adjusted total turnover. The result is a formula-based refund, not a refund of all business costs. See CBIC Refund Rules. One reader-forum post asked whether reverse-charge tax on foreign ads and software can be refunded for an exporter. It shows what people search for, but it is not an authority, and the answer depends on the statutory conditions and the ITC position (example thread).
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Older NASSCOM requests, for context
The refund concerns are not new. A September 2020 NASSCOM submission grouped its GST recommendations into six areas, including releasing working capital locked in accumulated input tax credit and refund issues (2020 submission). A July 2020 presentation recorded requests on delays and unclear procedure for SEZ invoice endorsement, refunds of ITC on capital goods, and inverted-duty refund treatment for input services (July 2020 presentation). These record what NASSCOM asked for then. They do not show that each issue is unchanged today.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What the government changed in 2025
The PIB’s account of the next-generation GST reforms describes these measures (PIB):
- “90% provisional refund for zero-rated supplies based on system-driven risk checks from November 1, 2025.”
- Removal of the value-based threshold for GST refunds on exports, aimed at small exporters with low-value consignments.
- Place of supply for intermediary services determined by the recipient’s location.
- A proposed ₹2,250 crore Export Promotion Mission covering export credit, cross-border trade factoring and non-tariff barriers, with an MSME focus. This is broader export support, not a fix for the GST issue.
These are announced reforms. They do not guarantee a refund in any individual case, and the sources do not show that they settled NASSCOM’s concerns.
What to watch
- Whether your services are classified as an export or as intermediary services, and on what facts.
- Whether you export under an LUT or pay IGST, and the effect on your cash.
- How cleanly your export invoices, ITC records and refund filings reconcile.
- How the provisional refund mechanism works in practice for your claims.
This article is background, not tax advice for any particular business.
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