February 23, 2023

GST: Whether Intermediary Services are export of Services?

Goods and Services Tax (GST) is a tax reform implemented in India to streamline the indirect taxation system. The GST regime has brought in several changes and introduced new concepts like the taxability of intermediary services. The question that arises is whether intermediary services qualify as exports of services under GST.

Intermediary services are services provided by a person to another person for arranging or facilitating the supply of goods or services or both between two or more persons but does not include a person who supplies such goods or services or both or actually supplies such goods or services or both.

According to GST, any service provided from an Indian territory to a place outside India is considered as an export of service. However, in the case of intermediary services, the place of supply is the location of the supplier of service, which is in India. Hence, it becomes important to understand the taxability of intermediary services under GST.

As per the GST Act, intermediary services are regarded as export of service if the following conditions are satisfied:

1. The supplier of service is located in India

2. The recipient of service is located outside India

3. The services are not merely auxiliary in nature

4. The intermediary service provider does not supply the goods or services on his or her behalf

If all the above conditions are satisfied, then the intermediary service provider can claim the refund of the GST paid on such services. However, if any one of the conditions is not fulfilled, then the intermediary service provider cannot claim the refund of GST.

It is important to note that intermediary services are not considered as exports of services in the case of goods or services supplied to a Special Economic Zone (SEZ) developer or a SEZ unit. This is because SEZs are considered as foreign territories for the purpose of GST.

In conclusion, it is clear that intermediary services are taxed under GST based on the location of the service provider. However, if the conditions mentioned above are satisfied, then such services can be considered as exports of services, and the GST paid on such services can be refunded. Therefore, it is crucial for businesses providing intermediary services to understand the taxability of such services under GST.


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