Proposed GST Council Reforms: to grant export status, slash 18% levy

The amendments in the upcoming 56th meeting of the Goods and Services Tax (GST) Council 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.

1. Proposal to Treat Intermediary Services as Exports

Current Legal Position:

As per Section 13(8)(b) of the IGST Act, 2017, the “place of supply” for intermediary services is deemed to be the location of the supplier (i.e., India), even if the recipient is located outside India. Hence, such services are not treated as exports and are subject to GST at 18%.

Section Reference:
IGST Act, 2017 – Section 13(8)(b): “The place of supply of the following services shall be the location of the supplier of services: (b) intermediary services.”

Proposed Amendment:

The GST Law Committee is considering deletion of Section 13(8)(b), to enable classification of intermediary services provided to foreign clients as exports. If accepted:

These services would become zero-rated under Section 16 of the IGST Act.
Suppliers could claim refund of input tax credit (ITC).

Zero-rating under export status:
IGST Act – Section 16(1): “zero rated supply” means any of the following supplies of goods or services or both, namely: (a) export of goods or services or both…”

Impact:

Relief from 18% GST for intermediary firms like brokers, agents, BPOs, IT-enabled services, etc.
Alleviates the Rs. 3,357 crore worth of pending show cause notices (SCNs) issued to such entities.
Enhances competitiveness for Indian service providers globally, since foreign clients cannot avail ITC on Indian GST.

2. Alignment of GST Registration Process across States

Background:

CBIC, via internal instructions in April 2025, has rolled out streamlined norms for Central GST officers regarding registration under the CGST Act. Key features:

Mandatory adherence to documentation in Form GST REG-01.
Defined processing timelines:
- 7 working days for standard applications.
- 30 working days for high-risk cases requiring physical verification.

Proposal in the 56th Council Meeting:

Finance Minister to urge States to adopt the same uniform guidelines to ensure consistency in registration procedures.

Relevant Rule:
Rule 9 of the CGST Rules, 2017: relates to verification and approval of registration applications.

Expected Benefits:

Reduction in discretion and delays by officers.
Boost to ease of doing business and increase in valid GST registrations.

Summary:

Issue	Current Law	Proposed Change	Expected Outcome
Intermediary Services	Place of supply in India u/s 13(8)(b) IGST Act	Deletion of Section 13(8)(b)	Treated as exports; zero-rated; refund of ITC
Registration Uniformity	Varies across States; inconsistent queries and delays	States to follow CBIC norms	Uniform, faster, and transparent registration process

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.