56th GST Council Proposes Omission of S. 13(8)(b): Location of Service Recipient will serve as Place of Supply for Intermediary Services

The 56th GST Council has recommended the omission of clause (b) of section 13(8) of the Integrated Goods and Services Tax (IGST) Act, 2017. At present, section 13(8)(b) deems the place of supply for “intermediary services” to be the location of the supplier of services.

The council meeting was held on 3rd September after more than 6 months, where the Prime Minister addressed press at 10 pm at night alongwith concerned officials.

This provision has worked against Indian service providers acting as intermediaries for foreign clients, since it results in taxation of such services within India and denies them the benefits available to exporters.

The purpose of the suggested amendment is to bring intermediate services into line with the general rule established by IGST Act, 2017 section 13(2). Following implementation, the location of the service recipient will serve as the place of supply for intermediary services.

This amendment indicates that supplies would be considered exports and be eligible for the associated benefits under the GST legislation if the recipient of the services is located outside of India.

The press release reads that “Amendment in place of supply provisions for intermediary services under section 13(8) of the IGST Act: The Council recommended omission of clause (b) of section 13(8) of IGST Act 2017. Accordingly, after the said law amendment, the place of supply for “intermediary services” will be determined as per the default provision under section 13(2) of the IGST Act, 2017 i.e. the location of the recipient of such services. This will help Indian exporters of such services to claim export benefits.”

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