Finance Act 2026 May Unlock Rs.4,000 Cr GST Refunds
The Finance Act 2026 amendment is expected to significantly benefit Indian companies providing intermediary services such as IT, ITeS, BPO, marketing, and sourcing services to overseas clients.
The amendment clarifies that the place of supply for intermediary services will now be the location of the recipient (foreign client) instead of the supplier. This change ensures that such crossborder services are treated as exports, making them eligible for GST refunds.
As a result, nearly Rs.4,000 crore stuck in litigation over GST refund claims could now be unlocked for businesses.
Earlier, these services were taxed because the place of supply was considered to be in India, leading to denial of export benefits and refunds. This caused significant disputes, especially for BPO and ITenabled services companies.
Several firms, including large IT companies, had approached High Courts due to ambiguity in the interpretation of intermediary services, despite clarifications issued by tax authorities.
The amendment modifies Section 13(8) of the IGST Act, allowing such services to qualify as zerorated exports with refund eligibility, which was not clearly available earlier.
Experts say this move will reduce longstanding litigation, improve clarity in taxation, and provide relief to businesses engaged in global service operations.
