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Nasscom has asked the government to clarify two GST issues affecting Indian services exporters: work supplied through an overseas branch, and research, engineering or testing performed in India on a prototype or sample provided by a foreign customer. The requests were reported ahead of the GST Council meeting scheduled for October 8, 2026; the report does not say the Council adopted either proposal.
What are the two GST issues Nasscom raised?
Services delivered through an overseas branch
Nasscom says Indian exporters can serve overseas customers through foreign branches, and that the way a company organizes its overseas presence should not, by itself, determine whether the service supplied from India qualifies as an export. As reported by Press Trust of India in Business Standard on October 7, 2026, the industry body sees a disparity between services routed through an overseas branch and those routed through a subsidiary. It says the current treatment can bring input tax credit reversals and additional compliance work. The report provides no quantified estimate of those effects.
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R&D, engineering or testing on an overseas customer’s prototype
The second issue concerns work done in India on a prototype or sample supplied by a customer abroad. Nasscom argues that when the customer receives and uses the result outside India, the service should qualify as an export. The PTI report attributes to Nasscom the view that current rules generally treat the service as supplied where the work is performed, in India, and deny export treatment. That is the industry body’s characterization; the report does not analyze how every type of prototype-related service should be classified.
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Clear out junk files and repair common Windows errorsFree Scan →Scan for outdated or missing drivers - takes under a minuteDriver Scan →Repair Windows errors before they cause bigger problemsFix Now →Ashish Aggarwal, Nasscom’s vice president and head of public policy, said: “The current rules generally treat such a service as supplied in India, where the work is done, and deny it export treatment. The customer receives and uses the result abroad, and the service should qualify as an export.”
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What determines whether a service is an export under GST?
A foreign customer alone does not make a service an export. Under section 2(6) of the Integrated Goods and Services Tax Act (IGST Act), all five conditions must be met:
- 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 where the Reserve Bank of India permits it.
- The supplier and recipient are not merely establishments of a distinct person.
The statutory conditions and place-of-supply framework appear in the 54th GST Council agenda. That agenda predates the 2026 amendment to the intermediary-services provision, so it is background on the framework, not proof that the former provision remains in force.
What changed in the law on intermediary services?
Separately from the two requests Nasscom was making in October 2026, section 13(8)(b) of the IGST Act—the special place-of-supply rule for intermediary services—was omitted under the Finance Act 2026. The GST Council Secretariat says the Finance Act received presidential assent on March 30, 2026, and records the omission as effective. The Finance Bill memorandum explains that, after the omission, the default place-of-supply rule in section 13(2) applies to intermediary services: generally, the recipient’s location, subject to statutory exceptions. See the GST Council Secretariat newsletter and the Finance Bill 2026 memorandum.
This enacted change should not be confused with Nasscom’s separate requests about overseas-branch arrangements and customer-provided prototypes. The October report describes those as unresolved policy concerns, not as changes already made to the law.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Did the GST Council accept Nasscom’s requests?
The October 7 report was published before the Council meeting scheduled for October 8, 2026, and does not report the meeting’s outcome. It says Nasscom sent a fresh submission to GST authorities on October 5, following a detailed paper to the Ministry of Finance in October 2025. The text and exact proposals in the October 5 submission are not established in the report. Aggarwal said clarification could support competitiveness, release working capital and reduce litigation; these are Nasscom’s advocacy arguments, not an official Council conclusion or measured estimate.
Quick Recap
What exporters should take from the announcement
- Assess export status against all five statutory conditions; having a foreign customer is not sufficient by itself.
- For a branch or prototype-related arrangement, the report identifies an industry concern, not a settled classification rule for every factual situation.
- Do not treat Nasscom’s requests as adopted policy. The October 7 report does not establish a Council decision on either issue.
- For intermediary services, account for the separate 2026 omission of section 13(8)(b) and the resulting section 13(2) default rule, as described in official sources.
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