For nearly a decade, an Indian business that earned a commission in foreign currency for helping a foreign company find customers, suppliers or deals in India was taxed as though it had made a sale down the street. It paid 18% GST on that commission, with no way to treat the earning as an export and no refund of the tax it had itself borne on its costs. From 30 March 2026, that anomaly is gone.

This guide explains, in everyday language, what the change is, who it helps, the new duty it creates for businesses that hire agents abroad, and the one trap that can quietly undo the benefit. No prior knowledge of tax law is assumed.

The change in one sentence Indian businesses that facilitate deals for clients located outside India can now treat that commission income as a zero-rated export (no GST), instead of paying 18% as before.

First, who is an “intermediary”?

Think of a property broker or a matchmaker. They bring two parties together, help a deal happen, and earn a commission, but they do not own or sell the thing being traded. In tax language, this is an intermediary. The law defines it in Section 2(13) of the IGST Act, 2017 as a broker or agent who arranges or facilitates a supply between two or more persons, but who does not supply that thing on his own account.

The Central Board of Indirect Taxes and Customs (CBIC), through Circular No. 159/15/2021-GST, set out three simple tests. A service is an intermediary service only when all three are met:

• There are at least three parties: two who do the main deal, and one who helps it along.
• You arrange or facilitate the main supply, you do not provide the main service yourself.
• You are not a sub-contractor actually performing part of the main job.

A quick contrast makes it clear. A software company that writes code directly for a foreign client is not an intermediary; it is a direct exporter dealing on a principal-to-principal basis. But a commission agent who finds Indian buyers for a foreign brand is an intermediary. Importantly, the 2026 reform did not touch this definition. Who counts as an intermediary is exactly the same as before; only the tax consequence has changed.

The old rule, and why it stung

Until 30 March 2026, Section 13(8)(b) of the IGST Act contained a special rule for intermediary services. It deemed the place of supply to be the location of the supplier, that is, India, no matter where the client sat. So even where the client was overseas and paid in foreign exchange, the law pretended the service had been consumed in India and charged 18% GST.

The sting was threefold. The earning could not be treated as an export. The exporter friendly route of supplying under a Letter of Undertaking (without paying tax up front) was shut. And the input tax credit that had piled up on costs could not be refunded. Indian agents were therefore costlier than rivals in countries where such facilitation is genuinely tax-free. Hence, the GST Council, at its 56th meeting in September 2025, recommended its removal.

What changed in 2026

The Finance Act, 2026 (Act No. 4 of 2026), which received Presidential assent on 30 March 2026, omitted clause (b) of Section 13(8) through Section 157 of that Act. With the special rule gone, intermediary services now fall under the ordinary rule in Section 13(2) of the IGST Act: the place of supply is the location of the recipient. Where the recipient is abroad, the place of supply is abroad, and the supply can qualify as an export. The change took effect from 30 March 2026 and applies going forward.

Before and after, at a glance

Aspect	Before 30 March 2026	From 30 March 2026
Governing rule	Section 13(8)(b) special rule	Section 13(2) default rule
Place of supply	Location of supplier (India)	Location of recipient (outside India)
Tax treatment (outbound)	Domestic supply, 18% GST	Export of service, zero-rated
LUT benefit	Not available	Available (invoice without paying GST)
Foreign agent fees (inbound)	Generally outside GST	Taxable in India under reverse charge

Two sides of the same reform

The same one-line amendment cuts both ways. It helps money you bring in, and it creates a new duty on money you pay out.

Figure 1: How the reform affects outbound earnings and inbound payments

If you serve a foreign client (outbound)

Your facilitation commission is now an export of service, provided the export conditions are met. You may either file a Letter of Undertaking (LUT) and raise invoices without charging GST, or pay IGST and claim a refund.

The five conditions for an “export of service”

Zero-rating is not automatic. The supply must satisfy all five conditions in Section 2(6) of the IGST Act. If even one fails, the export claim fails.

#	The condition (Section 2(6))	In plain words
1	Supplier is located in India	You are based in India.
2	Recipient is located outside India	Your client sits abroad.
3	Place of supply is outside India	Now satisfied for intermediaries after the 2026 change.
4	Payment received in convertible foreign exchange (or RBI-permitted INR)	Keep the FIRC or bank realisation proof.
5	Supplier and recipient are not merely branches of one entity	You and the foreign client must be genuinely separate.

If you hire an agent abroad (inbound)

The mirror image is a new cost to watch. If you pay a foreign agent or broker to arrange deals for you, the place of supply is now India, making it an import of service. You must pay 18% IGST under the reverse charge mechanism, raise a self-invoice under Section 31(3)(f) of the CGST Act, and report it in your returns. The tax so paid can be taken as input tax credit where the underlying expense is for your taxable business.

The one trap that can undo the benefit

Caution: do not mix two different services in one contract The benefit is available only to the extent your service is purely one of facilitation. The moment you also perform part of the job yourself, that part is treated differently, and bundling the two in a single agreement can endanger the whole arrangement.

Many agents do more than introduce buyers. They also install equipment, commission it, or train the customer’s staff at site in India. Those are services you perform on your own account, not mere facilitation. Under Section 13(3) of the IGST Act, the place of supply for such on-site, performance-based work is India, so they are taxable here regardless of who pays you.

The real danger is bundling. If a single contract lumps the pure commission together with installation or training, the tax authority may treat the entire arrangement as one taxable supply in India, taxing even the commission at 18% with interest and penalty. The cleanest protection is structural:

• Keep one agreement with the foreign principal for facilitation only.
• Sign a separate agreement with the Indian customer for installation, commissioning or training, charging GST on that in the normal way.
• Ensure purchase orders, quotations and emails do not suggest you are obliged to do the technical work under the facilitation deal.

Quick self-check: is your service zero-rated?

Walk down the questions below. Following the green path to the bottom means your facilitation income should qualify as a zero-rated export.

Figure 2: A step-by-step check for cross-border facilitation services

Your action checklist

If you earn commissions from abroad (outbound)

☐	File a Letter of Undertaking (LUT) for the year before raising your first zero-rated invoice.
☐	Re-classify invoices to foreign clients as zero-rated exports from 30 March 2026 onwards.
☐	Keep your file complete: agreement, purchase order, export invoice, FIRC or bank realisation certificate, and bank statement.
☐	Confirm you and the foreign client are genuinely separate entities, not branches of one another.
☐	Move any installation, commissioning or training into a separate domestic contract with the Indian customer.
☐	Review past periods carefully; the benefit is prospective, and refunds for earlier years carry litigation risk.

If you pay agents abroad (inbound)

☐	Identify every foreign agent, broker or facilitator you pay.
☐	Discharge 18% IGST under reverse charge and raise a self-invoice under Section 31(3)(f) of the CGST Act.
☐	Claim the input tax credit where the expense relates to your taxable business.
☐	Update your accounting and return-filing workflow so these payments are not missed.

Points to keep in mind

Read before you rely on this Prospective only. The change applies from 30 March 2026. Earlier periods stay under the old rule, and any refund for the past depends on the facts and on court rulings. Timing matters. Where the time of supply (for example, an advance) fell before 30 March 2026, that portion still attracts the old treatment. Classification is still arguable. The reform changed the consequence, not the test. Whether a given arrangement is truly intermediary in nature can still be disputed by the authorities.

In short

The removal of Section 13(8)(b) is one of the most welcome GST reforms for India’s service exporters in years. If you facilitate deals for clients abroad, your commission can finally travel as an export: no GST, with refunds of blocked credit. If you engage agents abroad, budget for reverse charge tax on those fees. And whatever you do, keep your facilitation work cleanly separated from anything you perform yourself on Indian soil. Getting the paperwork right from the very first invoice is what turns this reform into real savings.

Need a second pair of eyes? Every business is structured differently, and the line between facilitation and self-performed services is where most disputes arise. If you would like your contracts, invoices and refund position reviewed against the new regime, our team would be glad to help.

Disclaimer and confidence note

This article is general information for readers and does not constitute legal or tax advice, nor an advance ruling. It is not a substitute for advice on your specific facts.

Sources. Finance Act, 2026 (Act No. 4 of 2026), Section 157; IGST Act, 2017, Sections 2(6), 2(13), 13(2), 13(3); CGST Act, 2017, Sections 31(3)(f) and 54; CBIC Circular No. 159/15/2021-GST.