New

Viraaj Vashishth

June 11, 2026

Blog |

Explore GST

GST Rules

GST on Intermediary Services after Finance Act 2026: What every business must know now

Something big just shifted in India's GST landscape — and if you run a commission-based business, a lead generation agency, or any kind of service facilitation firm with overseas clients, this directly affects your tax bill.

The Finance Act 2026 just removed a clause that had been costing intermediary service providers lakhs in GST for years. Section 13(8)(b) of the IGST Act is gone. And with it, the old rules that forced your cross-border services into the domestic tax bracket have been wiped out.

But here's where things get tricky. The legal change is real yet the confusion it's causing is equally real. Some businesses are scrambling to create new invoice categories. Others are second-guessing their GST software. So let's cut through the noise and get you clear on exactly what changed, what didn't and what you need to do right now.

What Finance Act 2026 actually changed

Before April 1, 2026, Section 13(8)(b) of the IGST Act had a very specific job. It deemed the place of supply for intermediary services to always be India — regardless of where your client was sitting.

Think about that for a second. You're generating leads for a client in New York. You're invoicing in dollars. But the government said your service was being rendered in India so you owed 18% GST on it. Frustrating? Absolutely. Legal? Unfortunately, yes.

That changes entirely from April 1, 2026. With Section 13(8)(b) deleted, intermediary services now fall under the general rule in Section 13(2). Under this provision, the place of supply is determined by where the recipient is located. If your client is outside India, the place of supply moves outside India too. Simple as that.

Who exactly is an Intermediary under GST?

You might be wondering whether your business even qualifies. Good question. An intermediary, in GST terms, is anyone who arranges or facilitates a supply of goods or services between two other parties — without actually supplying those goods or services on their own account. Common examples include:

Commission agents who charge fees for connecting buyer and sellers
Lead-generation agents sending prospects to overseas companies
Marketers promoting global brands within India

Are Intermediary Services zero-rated exports now?

In many cases, yes. But not automatically — and that nuance matters.

From April 1, 2026, intermediary services supplied to foreign recipients can qualify as zero-rated exports under GST. However, you need to tick every box on the eligibility checklist first:

You (the supplier) must be based in India
Your client (the recipient) must be located outside India
The place of supply must fall outside India
Payment must arrive in convertible foreign exchange or approved foreign currency
You and your client cannot be mere establishments of the same legal entity

Meet all five conditions and your services may be fully zero-rated. That means no GST charged to clients and the added advantage of claiming Input Tax Credit refunds on your own purchases.

You should read: Intermediary Services under GST

Can you export Intermediary Services under LUT?

Yes — and this is where a lot of the post-Finance Act confusion has been unnecessary.Some businesses and software users started asking for a brand-new invoice category called "Export Without IGST." It sounds logical but it's actually solving a problem that doesn't exist. The GST framework already has the perfect tool for this: the Letter of Undertaking, or LUT. Here's how export options under GST actually break down:

Export Option	GST Treatment
Export under Bond/LUT	No IGST charged on the invoice
Export with Payment of IGST	IGST is charged upfront and refunded later

The Finance Act 2026 didn't invent a third path. What it did was open the existing LUT route to intermediary service providers who were previously locked out of it. So if you're eligible, you can now walk through a door that was already there — it just wasn't open to you before.

Before vs after: A clear comparison

Still unsure how dramatic this shift really is? Here's the full picture side by side:

Aspect	Before April 1, 2026	After April 1, 2026
Section 13(8)(b)	In force	Deleted
Place of Supply	Deemed as India	Recipient's location
Export Eligibility	Blocked for most intermediaries	Available if conditions are met
LUT Export Option	Generally unavailable	Now accessible
GST Rate Impact	18% on most cross-border services	Zero-rated export possible
ITC Refund	Limited	Fully available

For agencies, consultants and commission-based facilitators working with international clients, this is genuinely transformative.

Do you need a new "Export Without IGST" invoice type?

No. Period. The existing "Export under Bond/LUT" category already does exactly this job. Adding a new label called "Export Without IGST" would just duplicate an existing category and create compliance headaches where none need to exist. What the law changed is who gets to use the LUT export category — not what that category looks like or how it works. So if your GST software has been restricting intermediary service providers from selecting the LUT export option, that restriction needs to be lifted. That's the actual fix required here. Not a new invoice type but the removal of an old barrier.

For more details on which software to use read here: Best Accounting Software in India 2026

What should GST software do differently now?

Software providers have a specific responsibility here. The update isn't about building new features — it's about removing outdated guardrails. Here's what good GST software should now support:

Allow intermediary exporters to select "Export under Bond/LUT" without restrictions
Update help text and tooltips to reflect Finance Act 2026 changes
Align GSTR-1 reporting logic with the revised export treatment
Support correct statutory declarations on LUT-based export invoices
Speaking of declarations — every LUT export invoice must carry this exact line:

"SUPPLY MEANT FOR EXPORT UNDER BOND OR LETTER OF UNDERTAKING WITHOUT PAYMENT OF INTEGRATED TAX."

Don't skip that. It's not optional.

A real-world example

Picture an Indian lead generation agency — call them QuickLeads — working with a software company based in San Francisco.

Before April 1, 2026

The place of supply was India thanks to Section 13(8)(b). QuickLeads had to charge 18% GST even though their client was overseas and payment arrived in USD. Export treatment was off the table.

After April 1, 2026

The place of supply is now the United States — where the recipient sits. QuickLeads can issue invoices without charging any IGST, if they satisfy all export conditions and holds a valid LUT. Their tax efficiency improves overnight and they can even claim ITC refunds on their own business expenses.

Same agency, same client, same work. Completely different tax outcome. That's how significant this change is.

Conclusion

The deletion of Section 13(8)(b) under the Finance Act 2026 is one of the most business-friendly GST amendments in recent years for the intermediary services sector. Businesses that were previously stuck paying 18% GST on cross-border service invoices may now qualify for full zero-rated export treatment — including LUT-based invoicing and ITC refund eligibility.

The important thing to remember? The law changed who qualifies as an exporter. The invoicing framework itself hasn't been redesigned. Your existing "Export under Bond/LUT" category is already built for exactly this scenario.

Focus on satisfying the export conditions, securing a valid LUT and updating your invoicing declarations. Do that and you're well-positioned to operate compliantly — and far more tax-efficiently — from April 1, 2026 onwards.

If you are looking for a software that could comply with all of these new compliances in an automated way, Sign up on Swipe today and book a free demo!

FAQs

Does this mean GST on intermediary services is completely gone after April 1, 2026?

Not entirely. GST as usual is still levied on domestic intermediary services.But when you supply services to foreign recipients and meet the export conditions, those services can be zero-rated — meaning no GST liability on the client-facing invoice.

Can any intermediary service provider use the LUT export route now?

Only those who satisfy all five export eligibility conditions outlined earlier. Meeting those requirements is non-negotiable.

What happens if I don't hold a valid LUT?

You cannot export under Bond/LUT without a valid LUT in place. You will have to either get one before you start issuing export invoices or pay IGST on the initial date and get a refund afterwards.

What exactly does deleting Section 13(8)(b) mean in practical terms?

It means the government no longer automatically treats your cross-border intermediary services as happening in India. Your client's location now determines the place of supply — which is how it works for virtually every other service category.

Featured Posts

Guidelines for Deduction and Deposit of TDS by DDO under GST

What is the Difference Between Proforma Invoice and Tax Invoice

GST Rate and HSN Code for Articles of Apparel and Clothing Accessories (Not Knitted or Crocheted) - Chapter 62

GST penalty for technical E-way bill errors: When is Section 129 applicable?

Create GST invoice online with Swipe

EU–India Trade Deal Explained: Vehicles Set to Get Lower Import Tariffs in India

Swipe: The invoice app that's changing the way small businesses work

GST rates and 6405 HSN code for Other Footwear

Featured Posts

You might also like

Types of Accounting Vouchers and Their Uses Explained

HSN Code for Advertising Services

GST Rates & HSN Code 308 for Aquatic Invertebrates in India