Intermediary Services GST Changed in 2026 – Big Relief for Export of Services?

Finance Bill, 2026 removes intermediary services from Section 13(8) of the IGST Act. This change may allow many intermediary services to qualify as export of services. Explained simply with impact and precautions.

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📌 Why Intermediary Services Were a Big GST Problem

Since 2017, intermediary services have been one of the most litigated GST issues, especially for:

• Agents

• Brokers

• Commission-based service providers

• International sourcing & marketing agents

The problem arose because Section 13(8)(b) of the IGST Act fixed the place of supply as the location of supplier, even when services were provided to foreign clients.

👉 Result:

• GST payable in India

• Export benefits denied

• Continuous litigation

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🔁 What Has Changed in Finance Bill, 2026?

The Finance Bill, 2026 has deleted clause (b) of Section 13(8) of the IGST Act, 2017.

🔴 Old Provision (Before 2026)

Service Type	Place of Supply
Intermediary services	Location of supplier (India)

This made most intermediary services taxable in India, even if the recipient was outside India.

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🟢 New Provision (After Finance Bill 2026)

Service Type	Place of Supply
Intermediary services	Section 13(2) – Location of recipient

👉 This is the general rule for services.

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✅ What Does This Mean in Simple Words?

After this amendment:

✔ Intermediary services are no longer automatically taxable in India
✔ Place of supply shifts to foreign recipient’s location
✔ Many intermediary services may now qualify as export of services
✔ GST may not be payable, subject to export conditions

This is a major structural correction in GST law.

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🧠 Who Is Impacted the Most?

This amendment is highly relevant for:

• Commission agents dealing with overseas buyers

• Export sourcing agents

• Marketing & sales agents for foreign companies

• Brokerage and facilitation services

• Consultants acting as intermediaries

If you were paying GST only because of Section 13(8), this change matters to you.

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⚠️ Important: Not Every Intermediary Becomes Export Automatically

This is where many taxpayers may go wrong.

Even after deletion of Section 13(8)(b), all export conditions under Section 2(6) of the IGST Act must be satisfied, including:

• Recipient located outside India

• Payment received in convertible foreign exchange

• Supplier and recipient are not merely establishments of same person

❌ Misclassification can still attract disputes.

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❌ Common Mistakes to Avoid

• Assuming all intermediary services are now zero-rated

• Ignoring foreign exchange realisation

• Poorly drafted contracts

• Wrong classification between intermediary vs principal supply

This amendment reduces risk, but does not eliminate compliance.

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📋 What Should Businesses Do Now? (Action Checklist)

✔ Review nature of services (intermediary vs principal)
✔ Re-examine contracts with foreign clients
✔ Check export of services conditions
✔ Evaluate refund / LUT options
✔ Document place of supply rationale

Early review will prevent future notices and litigation.

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⚖️ Legal Reference

• Finance Bill, 2026 – Clause 141

• Section 13(8), IGST Act, 2017 (Amended)

• Section 13(2), IGST Act, 2017

• Section 2(6), IGST Act – Export of Services

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🏁 Conclusion

The removal of intermediary services from Section 13(8) is one of the most business-friendly GST changes introduced through Finance Bill 2026.

It aligns Indian GST law with global destination-based taxation principles and significantly reduces long-standing disputes — provided businesses classify and comply correctly.

If you provide services to foreign clients or operate as an agent/intermediary, it is advisable to re-evaluate your GST position after this amendment to avoid future exposure.