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The Finance Act 2026 resolves a decade of litigation by omitting Section 13(8)(b) of the IGST Act, effective March 30, 2026. This amendment aligns Indian law with global destination-based principles, allowing intermediary services provided to foreign clients to qualify as zero-rated exports. However, the transition creates compliance challenges, particularly concerning the Time of Supply for services spanning the amendment date. Furthermore, Indian recipients of foreign intermediary services must now pay GST under the reverse charge mechanism. While the reform enhances competitiveness, its prospective nature suggests that ongoing litigation relating to past liabilities will persist
INTRODUCTION
For over a decade, India's classification of 'intermediary services' has led to aggressive tax assessments and prolonged litigation. By taxing local agents and brokers for services provided to foreign clients, authorities effectively denied such businesses export benefits. While the Finance Act 2026, finally resolves this issue by aligning Indian law with global destination-based taxation principles, navigating the transition requires careful attention to historical definitions, place-of-supply rules, and ongoing litigation.
TAXABILITY U
