The upcoming 56th meeting of the Goods and Services Tax (GST) Council could bring significant relief to intermediaries such as brokers, agents, and digital platforms, with a proposal on the table to classify their services as exports, making them zero-rated under GST. A senior government official confirmed to Business Standard that the move is likely to receive final approval after the Law Committee gives its nod.
The proposal aims to eliminate the current 18 percent GST levy on intermediary services, offering a substantial financial reprieve to firms operating in sectors like textiles, commodities trading, and IT services. “With the Law Committee’s approval expected shortly, the GST Council’s final decision in its next meeting could mark a turning point for India’s intermediary-driven export sectors,” the official told Business Standard.
At present, under Section 13(8)(b) of the Integrated GST (IGST) Act, the place of supply for intermediary services is deemed to be India, even if the client is based overseas, subjecting these services to domestic GST. The proposed amendment seeks to delete this section, thereby reclassifying such services as exports and allowing firms to claim input tax credit refunds.
“This reform will level the playing field for Indian intermediaries competing globally, as foreign clients often cannot claim input tax credit on GST charged here,” the official noted in the Business Standard report.
Beyond the financial relief, the amendment could help resolve long-pending show-cause notices amounting to Rs 3,357 crore, many of which have been issued to entities in export-heavy sectors.
In a separate development, Finance Minister Nirmala Sitharaman is expected to urge states to align their GST registration procedures with newly streamlined norms recently issued for Central GST officers. These instructions, released in April by the Central Board of Indirect Taxes and Customs (CBIC), are intended to curb discretion and bring uniformity to the registration process, Business Standard reported.
The CBIC norms instruct officers to adhere strictly to documentation listed in Form GST REG-01, discourage unnecessary queries, and impose defined processing timelines, seven working days for standard applications and up to 30 days for high-risk cases requiring physical verification.
“The finance minister will nudge states to follow the same registration guidelines in spirit and practice. GST is a shared responsibility, and there needs to be uniformity in how rules are implemented,” a senior official told Business Standard.
Early implementation at the central level has shown encouraging signs, according to the official. “We are seeing positive traction in registration numbers, though we don’t have consolidated data yet as it has only been a month. We will also ask states to share their numbers to assess the broader impact,” the official added.
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