Section 2(6) of IGST Act 2017 - Export of Services Definition
'Export of services' means the supply of any service when - (i) supplier in India; (ii) recipient outside India; (iii) place of supply outside India; (iv) payment in convertible foreign exchange or in Indian rupees wherever permitted by RBI; and (v) supplier and recipient not merely establishments of a distinct person under Explanation 1 of Section 8. All 5 conditions must be cumulatively satisfied.
CBIC Circular 161/17/2021-GST dated 20 September 2021
FOUNDATIONAL clarification: Supply of services by a subsidiary, sister concern, or group concern of a foreign company - which is incorporated in India under the Companies Act 2013 - to the establishments of the said foreign company located outside India (incorporated outside India) - would NOT be barred by condition (v) of Section 2(6) IGST Act 2017 for being considered as export of services. The Indian-incorporated entity and the foreign-incorporated entity are separate persons, not merely establishments of the same person under Explanation 1 of Section 8 IGST Act. Resolves the most common rejection ground for IT GCCs and captive units serving their MNC parents.
Finance Act 2026 - Omission of Section 13(8)(b) IGST Act
Pursuant to the recommendation of the 56th GST Council meeting held on 3 September 2025, and in response to sustained industry representations, the Legislature has omitted Section 13(8)(b) of IGST Act through the Finance Act 2026 (Presidential assent 30 March 2026). Effective from 30 March 2026, the place of supply of intermediary services follows the default rule under Section 13(2) - location of the recipient. Indian intermediaries serving foreign clients now qualify for export status, zero-rated benefits, and refund of accumulated ITC under Section 54(3). The amendment particularly benefits IT/ITES, GCCs, BPO/KPO units, consulting firms, and marketing support entities.
Lubrizol Advance Materials India Pvt Ltd v UOI (Bombay HC, W.P. 987 of 2026)
The Bombay High Court (before G.S. Kulkarni and Aarti Sathe JJ) quashed an RFD-06 refund rejection of the Indian subsidiary of the Lubrizol Group which had provided sales-support, administrative and back-office services to overseas group entities. The Court held that the services were rendered on principal-to-principal basis on cost-plus model - NOT intermediary. The HC emphasised that where CESTAT had previously ruled in petitioner's favour under the Service Tax regime for the identical agreement, GST authorities must provide a cogent reason to deviate. The judgment reinforces the Circular 159/15/2021-GST tripartite test and provides framework for retroactive refund recovery for past periods where rejection was on intermediary grounds.
Northern Operating Systems Pvt Ltd v UOI (Supreme Court, 2022)
The Supreme Court held that secondment of foreign employees from a foreign group entity to an Indian subsidiary, where the salary cost is recharged to the Indian entity, constitutes a manpower supply service taxable under reverse charge mechanism. For Indian recipients, GST at 18 percent IGST applies under Section 5(3) IGST Act read with Notification 10/2017-IT(R); ITC available under Section 16(1) for taxable outward supplies; impacts the accumulated ITC refund computation under Rule 89(4). Patron's discipline ensures secondment agreements distinguish stewardship from manpower supply; arm's-length cost-recharge invoicing; RCM compliance.
Section 54(3) of CGST Act 2017 and Rule 89(2)(c) / 89(4)
Section 54(3) provides for refund of accumulated ITC on zero-rated supplies. Rule 89(2)(c) requires Statement 3A for service exports - invoice-wise register with FX value, INR equivalent, FIRC reference, BSR code. Rule 89(4) prescribes Net ITC formula - Input + Input Services ITC accumulated in tax period, excluding capital goods ITC and reversed ITC. Section 54(7) - 60-day final sanction timeline. Section 56 - 6 percent interest if delayed beyond 60 days; 9 percent for appellate orders.
Rule 96A of CGST Rules 2017 and Notification 37/2017-CT
Rule 96A - LUT mechanism in Form GST RFD-11 for export of goods/services without payment of IGST. Valid for one financial year. Renewed annually before 31 March. Subject to Notification 37/2017-Central Tax dated 4 October 2017 prosecution eligibility test - no prosecution for tax evasion above Rs 2.5 crore under CGST/IGST Act or existing law.
Cloud Import RCM - Section 5(3) IGST + Notification 10/2017-IT(R) + Section 31(3)(f) CGST
Cloud hosting expenses on AWS, Azure, GCP, etc. are imports of services. Section 5(3) IGST Act with Notification 10/2017-Integrated Tax (Rate) triggers RCM. Indian recipient pays IGST at 18 percent under reverse charge mechanism in cash via PMT-06 (cannot offset against credit ledger). Self-invoice issued under Section 31(3)(f) of CGST Act. RCM-paid IGST is available as ITC under Section 16(1) for taxable outward supplies and forms part of Net ITC for refund under Rule 89(4).
Notification 13/2025-Central Tax dated 17.09.2025 and CGST Instruction 6/2025
Notification 13/2025-CT effective 01.10.2025 introduced risk-based 90 percent provisional refund framework with 8-factor classification. CGST Instruction 6/2025 dated 03.10.2025 operationalised this - low-risk applicants receive RFD-04 provisional 90 percent within 7 days of RFD-02 acknowledgement, dramatically shortening the historical 30 to 45 day wait for IT/SaaS exporters.
FEMA Section 7 + RBI Master Direction on Export of Goods and Services
FEMA Section 7 requires declarations for exports of goods and services. RBI Master Direction prescribes Form Softex for software exports - submitted to AD Bank for Non-STPI or via STPI for STPI-registered units. Submission frequency typically monthly. Form Softex is documentary evidence of export realisation under FEMA and strengthens the documentary trail for GST Statement 3A.