GST Applies on Indian Companies Marketing Foreign Software to Local Clients
Marketing foreign software in India for a foreign client is an intermediary service and is subject to GST.
- Ruling
- NO.GST-ARA- 08/2018-19/B- 76 dated 26.07.2018
- Dated
- 26 Jul 2018
- Authority
- Authority for Advance Ruling
This page was written by Patron Accounting’s AI from the official release and reviewed before publishing. It explains the document in plain language. It is not the document itself. Where this page and the original differ, the original governs.
The short version
- Sabre India asked if marketing foreign software qualifies as tax-free export
- Tax authority ruled these marketing services do not qualify as export
- Company was classified as an intermediary connecting buyers and foreign sellers
- Place of supply is in India, making the service liable for GST
In short
Sabre India promoted Singapore-based travel reservation software to travel agents in India and received payment in foreign currency. Sabre India argued that earning foreign exchange from an overseas client makes their work a GST-free export of service. The tax authority examined whether promoting another company's product makes a business an intermediary rather than an exporter.
What has changed
How it worked before
Many Indian subsidiaries assumed that marketing foreign software to local customers and getting paid in foreign currency by an overseas parent counted as a GST-free export of service.
What has changed
The Authority for Advance Ruling decided that Sabre India acts as an intermediary under Section 2(13) of the Integrated Goods and Services Tax (IGST) Act, 2017. Because the company facilitates software access between the Singapore owner and Indian users, the place of supply stays in India under Section 13(8)(b). Therefore, receiving payment in foreign currency does not qualify the service as an export, and local GST applies.
Who this affects
Indian businesses and subsidiaries that market, promote, or facilitate sales of foreign software, digital platforms, or products to clients in India.
An example
Suppose an Indian firm named TechPromote India enters an agreement with a US software provider to market an accounting tool to Indian companies. TechPromote finds local customers, provides support, and receives a commission in US dollars, but the US owner executes all software licenses directly with the users. TechPromote asks whether its promotional work qualifies as a GST-free export of service. Following this ruling, tax authorities would classify TechPromote as an intermediary, making its services subject to GST in India.
What you should do
Review your agreements with foreign clients to see if you are acting as a main service provider or as an intermediary facilitating sales. Remember that an advance ruling binds only the business that asked for it. If you have a similar setup, consult a tax professional or apply for your own ruling before treating foreign earnings as GST-exempt.
If you do nothing
If you treat marketing services for foreign clients as tax-free exports without confirming your status, GST authorities can issue demand notices for back taxes. You may have to pay 18% GST out of pocket along with interest and penalties. Relying on another company's advance ruling will not protect you during an audit.
The terms explained
- intermediary
- A broker, agent, or person who arranges or facilitates the supply of goods or services between two or more people, without providing the main service themselves.
- export of service
- A service provided by a supplier in India to a recipient outside India, where payment is received in foreign currency and the place of supply is outside India.
- place of supply
- The location fixed by GST laws to determine whether a transaction is treated as local or international for tax purposes.
- input tax credit
- The GST a business pays on its purchases that it can set off against the GST it collects on its sales.
The ruling in detail
Authority for Advance Ruling
Sabre Travel Network India Pvt Ltd
NO.GST-ARA- 08/2018-19/B- 76 dated 26.07.2018 · Maharashtra
Questions before the authority
- Whether the marketing, promotion and distribution services (hereinafter referred to as the "Said Services") provided by Sabre India to Sabre APAC would be subject to tax under the Central Goods & Services Tax Act 2017 and the Maharashtra Goods & Services Tax Act 2017 (hereinafter referred to as "Said Tax Acts") or would remain excluded under the said Acts as the said activities qualify as export of service in accordance to Section 2(6) of the Integrated Goods and Service Tax Act 2017 read with the said Tax Acts?
Facts
The Applicant, a Indian subsidiary of Sabre Asia Pacific Pte. Ltd. (Sabre APAC, Singapore), entered into a Marketing Agreement to promote and distribute Computer Reservation System (CRS) Software in India. The Applicant approaches potential travel agent subscribers, markets the software, assists in onboarding, and provides localized support services, while receiving consideration from Sabre APAC on a cost-plus-markup basis in foreign currency. Sabre APAC retains ultimate control over subscribing agreements and access credentials.
Ruling
| Question | What the authority ruled |
|---|---|
| Taxability and export qualification of marketing, promotion, and distribution services provided to Sabre APAC | The marketing, promotion and distribution services provided by the applicant to Sabre APAC would be subject to tax under the provisions of the GST Act. Services categorized as intermediary services under Section 2(13) of the IGST Act, 2017. |
The Authority held that the Applicant functions as a link facilitating the transaction between the foreign entity and Indian subscribers, thereby qualifying as an **intermediary** under Section 2(13) of the IGST Act, 2017. As per Section 13(8)(b) of the IGST Act, 2017, the place of supply for intermediary services is the location of the service provider in India. Consequently, the services do not qualify as export of services under Section 2(6) of the IGST Act, 2017 and are **subject to GST**.
Reasoning
The Applicant is responsible for identifying, educating, and scouting potential Indian travel agents to utilize Sabre APAC's CRS software. Since the software belongs to the foreign entity and contracts are executed between Sabre APAC and the subscribers, the Applicant acts as an agent or broker facilitating supply rather than supplying the primary service on its own account. Therefore, the service falls within the definition of an intermediary under Section 2(13) of the IGST Act, 2017. Under Section 13(8)(b) of the IGST Act, 2017, the place of supply for intermediary services is fixed at the **location of the supplier in India**, failing the requirement under Section 2(6)(iii) for the place of supply to be outside India.
Provisions relied on
- Section 2(6) of the IGST Act, 2017
- Section 2(13) of the IGST Act, 2017
- Section 7(5)(c) of the IGST Act, 2017
- Section 8(2) of the IGST Act, 2017
- Section 13(8)(b) of the IGST Act, 2017
- Section 16 of the IGST Act, 2017
- Section 97 of the CGST Act, 2017
- Section 98 of the CGST Act, 2017
For the practitioner
This ruling highlights that Indian subsidiaries marketing and arranging access for foreign digital platforms or software to local customers risk classification as **intermediaries**. Practitioners should note that receiving cost-plus remuneration in foreign currency does not automatically grant export status if the place of supply falls in India under Section 13(8)(b).
Source
This is a summary prepared from the published order, which is a scanned document. It is a reading aid and not the authority: where the two differ, the order governs. Verify every provision against the original before relying on it.
Original order: https://www.gstcouncil.gov.in/sites/default/files/AAR/maha-gst-ara-08-b-76_dt.26.07.18_stnipl.pdf
Legibility of the scan, as read: high.
Prepared 21-10-2026.
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