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As of 7 October 2026, reports described a proposal for the GST Council to consider changes to the export-of-services definition involving Indian companies’ overseas branches. Those reports do not establish that the Council approved a change or that a new rule has taken effect. Under the published statutory test, an overseas payment alone does not make a service supplied between establishments of the same company an export.
What is the current GST test for export of services?
Section 2(6) of the IGST Act, 2017, as reproduced in the GST Council’s published meeting material, requires all five conditions to be met:
- The supplier of the service is located in India.
- The recipient of the service is located outside India.
- The place of supply of the service is outside India.
- Payment is received in convertible foreign exchange, or in Indian rupees where the Reserve Bank of India permits it.
- “The supplier of service and the recipient of service are not merely establishments of a distinct person in accordance with Explanation 1 in section 8.”
The Council’s 45th-meeting analysis explains that establishments of the same entity in India and abroad are treated as distinct persons for IGST purposes. It says that a service supplied by one such establishment to another does not fall within the then-current definition of export of services. The 52nd GST Council meeting materials reproduce the five-part test.
That means the payment condition is not a substitute for the distinct-person condition: receiving foreign exchange does not, by itself, turn a same-entity branch supply into an export. The cited Council materials explain the published rule in their respective meeting documents; businesses should check for later amendments, notifications and case-specific facts before relying on them.
What change was reported for overseas branches?
Reports dated 5 and 6 October 2026 said the Council was expected to consider a proposal concerning the export definition. The coverage described an aim of aligning the definition with commercial activity generating foreign exchange and addressing ambiguity around services supplied through an Indian company’s overseas branch. The reports were about expected consideration at the 7 October meeting—not confirmation of a decision.
The Economic Times/PTI report of 5 October and ETCFO report of 6 October do not establish the proposal’s final wording, eligibility rules or legal effect.
Published rule versus reported proposal
| Question | Published statutory baseline | Reported proposal |
|---|---|---|
| Same-entity overseas branches | The distinct-person condition excludes a supply between establishments of the same person from export status under the Council’s published explanation. | Reports said the Council was expected to consider addressing overseas-branch services; they do not establish how a final rule would treat them. |
| Foreign exchange or commercial activity | Payment in convertible foreign exchange, or permitted Indian rupees, is one of five conditions; it is not the only condition. | Reports described a possible closer link between export status, commercial activity and foreign-exchange earnings. Final criteria were not reported. |
| Legal status and effective date | The cited meeting materials reproduce and explain the published test. | Approval, amended text, commencement and transition arrangements are not established by the reports. |
Has the GST Council changed the rule?
The available reports establish expected consideration, not approval or implementation. They do not provide an official decision, amended statutory text, notification, circular, commencement date or transition rule. The Council meeting outcome and any subsequent legal instrument therefore need to be confirmed through official post-meeting materials before treating the proposal as law.
For a business with an Indian establishment and an overseas branch, the practical questions to check in any official update are whether the distinct-person condition changes, what qualifies as the relevant commercial or foreign-exchange activity, when any change starts, and whether it applies to existing arrangements. Until those details are established in a legal instrument, the reported proposal should not be used as evidence that a branch supply qualifies as an export.
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