MORGAN BLAKE ADVISORY LLP
GST for Cross-Border Services
What IT, SaaS and outsourcing businesses need to know about export classification in 2026
India's services exporters — particularly IT companies, SaaS providers, marketing agencies and back-office outsourcing firms serving foreign clients — are working under updated GST guidance on how cross-border services are classified. Getting this classification right determines whether a transaction is treated as a zero-rated export or taxed as a domestic supply, and the financial difference between the two is significant.
The Core Distinction: Export vs. Intermediary
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Intermediary Service
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Genuine Export
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What it is
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Arranging or facilitating a supply between two other parties
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Directly providing the service to the overseas client
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GST treatment
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Taxed as a domestic supply, even if the payer is overseas
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Zero-rated export, no domestic GST
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Example
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A platform that connects an overseas buyer with a third-party Indian supplier
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A software team building a product directly for an overseas client
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Common businesses
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Sourcing agents, certain marketing/booking platforms
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SaaS providers, dev teams, back-office/BPO providers, agencies executing work directly
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Why this matters: some businesses have been over-cautiously classifying themselves as intermediaries (and paying domestic GST unnecessarily), while others have misclassified genuine intermediary arrangements as exports. Both errors carry financial and compliance risk — one in overpaid tax, the other in potential demand notices.
Place of Supply for Digital Services
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Service Type
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Place of Supply Rule
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B2B digital services (SaaS, cloud, API, AI tools)
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Follows the recipient business's location
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B2C digital services (sold to individual overseas consumers)
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Determined by the consumer's location
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Indian SaaS and cloud businesses selling internationally should map their customer base against these rules to confirm export classification is correctly applied across both B2B and B2C revenue streams.
Foreign Digital Services Into India
Foreign companies providing Online Information and Database Access or Retrieval (OIDAR) services to Indian consumers continue to attract GST, with clearer guidance now available on what qualifies as an OIDAR service and on the obligations of e-commerce operators acting as intermediaries for such services. Indian businesses that act as platforms or intermediaries for foreign digital service providers should review whether these obligations apply to them.
Refunds Have Genuinely Improved for Exporters
It isn't all added complexity. Refund processing for exporters has become significantly faster, with consistently compliant exporters now able to receive a substantial portion of their refund within about a week of filing, supported by automated, risk-based processing. The LUT requirement remains, and must be renewed every financial year for IGST-free exports, but the downstream refund experience for compliant exporters is materially better than it used to be.
What We Recommend
- Re-examine your export classification against the current intermediary definition — don't assume past classification is still correct.
- Map B2B and B2C digital service revenue separately, as place-of-supply rules differ between them.
- Maintain a clean LUT filing history, since refund speed is increasingly tied to compliance track record.
- Review intermediary platform obligations if your business facilitates services from foreign providers into India.
Cross-border service taxation is one of the more technical areas of GST, and misclassification in either direction carries real cost. If your business serves international clients, it's worth having your export classification reviewed against the current rules.
Contact us: info@morganblakeadvisory.com | +91 98184 77953
This article is for general informational purposes and does not constitute tax advice. Cross-border GST treatment depends on the specific facts of each arrangement and should be reviewed individually with our advisory team.
