When either the supplier or the recipient of a service is outside India, section 13 of the IGST Act, 2017 fixes the place of supply. The default rule in section 13(2) is the location of the recipient (or of the supplier, if the recipient's location is not available in the ordinary course of business). The exceptions are: services performed on goods or requiring the physical presence of an individual — where performed (13(3)); services relating to immovable property — where the property is (13(4)); admission to and organisation of events — where held (13(5)); banking, financial and NBFC services to account holders, and hiring of means of transport up to one month — supplier's location (13(8)); passenger transport — place of embarkation (13(10)); services on board a conveyance — first scheduled departure point (13(11)); and online information and database access or retrieval (OIDAR) services — recipient's location (13(12)). The intermediary rule in section 13(8)(b), which placed facilitation services at the supplier's location, was omitted by the Finance Act, 2026 from 30 March 2026.
Key facts
| Provision | Old reference (to 31 Mar 2026) | New reference (from 1 Apr 2026) | Rate / threshold | Timing | Form |
|---|---|---|---|---|---|
| Default — location of recipient | s. 13(2) IGST Act | Unchanged | — | — | — |
| Performance-based services (goods made available; individual's presence) | s. 13(3) | Unchanged | Place of performance; remote repair of goods excluded | — | — |
| Immovable property services | s. 13(4) | Unchanged | Location of property | — | — |
| Events — admission and organisation | s. 13(5) | Unchanged | Where the event is held | — | — |
| Supplies at more than one location / state | s. 13(6), 13(7) | Unchanged | Taxable territory; proportionate | — | — |
| Banking to account holders; hiring of transport up to 1 month | s. 13(8)(a), (c) | Unchanged | Location of supplier | — | — |
| Intermediary services | s. 13(8)(b): location of supplier | Omitted by s. 157, Finance Act, 2026 → s. 13(2) | — | Supplies on or after 30 March 2026 | — |
| Transportation of goods | s. 13(9): destination (omitted w.e.f. 1 Oct 2023) | Default rule applies | — | — | — |
| Passenger transport; on-board services | s. 13(10), (11) | Unchanged | Embarkation; first departure point | — | — |
| OIDAR services | s. 13(12); s. 2(17) | Unchanged | Location of recipient; supplier registers if recipient is a non-taxable online recipient | — | GST REG-10 |
| Anti-avoidance power | s. 13(13) | Unchanged | Government may notify place of effective use and enjoyment | — | — |
Why the place of supply matters
For a cross-border service the place of supply decides two things: whether the Indian supplier's service can be an export (condition (iii) of section 2(6) requires the place of supply to be outside India), and whether an Indian recipient's purchase from abroad is an import of services on which it must pay IGST under reverse charge. Get the section 13 analysis wrong and either the zero-rating fails or the reverse charge is missed.
The default rule and how recipients are located
Section 13(2) sends the place of supply to the recipient's location. Section 2(14) IGST locates a recipient at the place of business for which registration was obtained; failing that, at the fixed establishment elsewhere; where the supply is received at more than one establishment, at the one most directly concerned with the receipt; and failing all, at the usual place of residence. For a foreign parent with no Indian establishment, that is abroad. For a foreign parent whose Indian branch or project office is the one actually receiving the service, it is India — and the export fails even though the invoice goes overseas.
The exceptions that catch Indian service exporters
Performance-based services — section 13(3)
Two categories: services supplied in respect of goods that are required to be made physically available by the recipient to the supplier (testing, repair, inspection, processing of the recipient's goods in India), and services supplied to an individual that require the individual's physical presence (training delivered in person in India, medical services). Place of supply is where the service is actually performed. If a foreign parent ships hardware to India for the Indian subsidiary to test, the testing service is performed in India and is not an export — unless it falls within the proviso for services supplied electronically from a remote location in respect of goods elsewhere.
Immovable property — section 13(4)
Architects, interior designers, surveyors, property managers and agents: place of supply is where the property is. Designing a foreign client's office in Bengaluru is a domestic supply.
Events — section 13(5)
Admission to, and organisation of, cultural, educational, sporting, scientific or similar events, including conferences and exhibitions: where the event is held. Organising a foreign parent's annual sales conference in Goa is not an export.
Intermediary services — section 13(8)(b), now omitted
An "intermediary" (section 2(13)) is a broker, agent or any other person who arranges or facilitates the supply of goods or services between two or more persons, but does not include a person who supplies on their own account. Until 30 March 2026, section 13(8)(b) placed intermediary services at the supplier's location, so an Indian company that arranged sales between its foreign parent and the parent's customers was taxed in India at 18% with no export benefit and no refund, despite being paid in foreign exchange. The GST Council recommended removal at its 56th meeting on 3 September 2025; section 157 of the Finance Act, 2026 omitted the clause. With the clause gone, intermediary services fall under the default rule and are exports if the other conditions are met. The definition of intermediary in section 2(13) is unchanged, and it continues to matter for periods before the omission and for distinguishing "on own account" supplies.
OIDAR — section 13(12)
Online information and database access or retrieval services (cloud, streaming, e-books, online advertising, software delivered online with minimal human intervention) are placed at the recipient's location. A foreign OIDAR supplier to an Indian non-taxable online recipient must register in India and pay the tax; a registered Indian business recipient pays under reverse charge.
Section 13 versus section 12
Section 12 applies when both supplier and recipient are in India (inter-state versus intra-state); section 13 applies when either is outside India. A supply by an Indian company to a foreign parent's Indian branch is a section 12 case — domestic, taxable.
Worked example
An Indian subsidiary performs three services for its US parent in a year: (a) software development, USD 2 million; (b) in-person training of the parent's engineers at the Bengaluru office, USD 60,000; (c) finding Indian distributors for the parent's products and facilitating their contracts with the parent, commission USD 150,000.
| Service | Section 13 rule | Place of supply | Treatment |
|---|---|---|---|
| (a) Software development | 13(2) default | USA | Export — zero-rated under LUT |
| (b) In-person training of individuals in India | 13(3)(b) — requires physical presence | Bengaluru | Not export; IGST payable (recipient outside India, place of supply in India) |
| (c) Facilitating distributor contracts (intermediary) | Before 30 Mar 2026: 13(8)(b) — supplier's location; from 30 Mar 2026: 13(2) | India until 29 Mar 2026; USA thereafter | Taxable at 18% for the earlier period; export for supplies from 30 March 2026 |
The invoices for (c) raised in April 2026 onwards go under the LUT; the February 2026 commission invoice carries IGST. The refund claim under Rule 89(4) includes the turnover of (a) and, from the change date, (c).
Common mistakes we see
- Assuming every service paid in dollars is an export. Performance-based, property and event services are placed where they happen.
- Ignoring the parent's Indian fixed establishment when identifying the recipient, which can relocate the place of supply to India.
- Continuing to charge IGST on genuine intermediary services after 30 March 2026, or, conversely, re-characterising pre-change invoices as exports.
- Treating 'marketing support' and 'intermediary' as the same thing. Marketing support performed on the Indian company's own account was always under the default rule; only facilitation between two other persons was caught by 13(8)(b).
- Applying section 12 rules to a cross-border supply because the invoice is in rupees.
Frequently asked questions
What is the general rule for the place of supply of services to a foreign company?
The location of the recipient, under section 13(2) of the IGST Act, unless one of the specific rules in sections 13(3) to 13(13) applies.
Is the intermediary rule still in force?
No. Section 13(8)(b), which placed intermediary services at the supplier's location, was omitted by section 157 of the Finance Act, 2026 with effect from 30 March 2026. Intermediary services now follow the default recipient-location rule.
What is an intermediary under GST?
Under section 2(13) of the IGST Act, a broker, agent or any other person who arranges or facilitates the supply of goods, services or securities between two or more persons, excluding a person who supplies on their own account. The definition remains relevant for periods before 30 March 2026.
Is software testing for a foreign parent an export?
If the testing is performed remotely on software, yes under the default rule. If the parent sends physical goods to India to be tested, section 13(3)(a) places the supply in India and it is not an export.
What about services to a foreign parent's branch in India?
Both supplier and recipient are then in India; section 12 applies and the supply is a domestic taxable supply.
Where is the place of supply of cloud or SaaS services bought from abroad?
India — section 13(12) places OIDAR services at the recipient's location. A registered Indian business pays IGST under reverse charge; a foreign supplier to Indian consumers must register and pay.
Sources
Primary sources only. Statutory text is read from the official publication; where a provision has been renumbered, the pre-2026 reference is given alongside so older material can be reconciled.
- CGST Act, IGST Act, CGST Rules and GST circulars — CBIC
- e-Gazette of India — Finance Act, 2026; Income-tax Rules, 2026; FEMA notifications
Last reviewed on 1 November 2026 by Monal Agarwal, FCA, VMS Jhunjhunwala & Co. Law stated as at that date; the Income-tax Act, 2025 and Income-tax Rules, 2026 apply from 1 April 2026.
