Finance Act 2026: Big GST Relief for Indian Companies Providing Intermediary Services to Foreign Clients:

Finance Act 2026: Big GST Relief for Indian Companies Providing Intermediary Services to Foreign Clients Indian companies that provide support services like BPO, sales support, and back-office support to foreign clients could get a major tax relief under the Finance Act 2026. The amendment in the Finance Act 2026 now states that the place of supply for intermediary services will be the "location of the recipient of such services". Earlier, such services were taxed under GST because the "place of supply" was considered to be the supplier's location, i.e., India. Due to this, many companies were denied claiming export benefits and GST refunds, leading to significant litigation and GST notices.

Also Read

GST Collections in India Show Steady Growth in FY 2025-26

Many IT companies, such as Genpact India and Ernst & Young (EY), had earlier approached High Courts due to unclear rules and the denial of refunds. Even though the government had issued a circular for clarification, tax authorities often applied the rules differently, causing legal disputes. Now, the law has been changed. After the 2026 amendment, the place of supply for intermediary services will be considered as the location of the recipient (foreign client). The intermediary services given to the foreign clients can now qualify as "zero-rated exports" with refund eligibility.

Also Read

GSTN Update on difficulty in filing Appeal due to ‘NIL incorrect Demand’ Orders

This change is expected to unlock around Rs 4,000 crore that was stuck in disputes and litigation. With this amendment, the government has brought clarity and reduced confusion. It will benefit IT and IT-enabled services (ITeS) companies.