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Nasscom has asked India’s GST authorities to clarify how services supplied from India to overseas customers should be treated when a company delivers them through a foreign branch. Its position is that a company’s choice between a branch and a separately incorporated subsidiary should not, by itself, decide whether the Indian services qualify as exports. This is an industry proposal, not a change to GST law or a confirmed GST Council decision.
What Nasscom proposed ahead of the October 2026 GST Council meeting
Nasscom made a fresh submission to GST authorities on October 5, 2026, ahead of a GST Council meeting reported as scheduled for October 8. The submission addressed two service-export concerns: services delivered through overseas branches, and research and development performed in India on prototypes or samples supplied by overseas customers. The full text of the October 5 submission was not available in the reporting, so the precise amendment or administrative remedy Nasscom requested is not established. Moneycontrol’s October 7 report and Mint’s October 6 report describe the submission and the issues raised.
As of October 7, the reported Council meeting was still in the future. No outcome can be stated on that date, and Nasscom’s submission should not be read as an accepted recommendation or a change in the law.
Why the HO–BO structure matters to the export question
“HO–BO” refers to a head-office and branch-office arrangement. Nasscom’s concern is that, under the reported framework, services supplied from India may face different GST export treatment depending on whether the overseas operation is a branch of the same organisation or a separately incorporated subsidiary. Industry reporting says the branch route can create potential input tax credit reversals and added compliance work compared with routing services through a subsidiary. These are reported industry concerns, not a blanket legal conclusion for every company or transaction. Moneycontrol and Mint report the distinction raised by Nasscom.
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| Issue | Overseas branch | Separately incorporated overseas subsidiary |
|---|---|---|
| Legal form | Overseas presence is a branch of the same organisation. | Overseas presence is a separately incorporated entity. |
| Reported export-treatment concern | Nasscom says the structure may affect whether services supplied from India qualify as exports. | Industry reporting describes this route as potentially receiving different export treatment. |
| Potential consequences reported | Possible input tax credit reversals and additional compliance burden. | Reporting contrasts the route with branch delivery but does not quantify or establish a universal outcome. |
The comparison describes the issue raised in industry reporting; it does not determine how GST applies to a particular contract, service, or corporate arrangement.
What existing GST guidance does—and does not—settle
CBIC guidance on offices in different Indian states
CBIC Circular 199/11/2023-GST, dated July 17, 2023, addresses services provided by an office in one Indian state to an office of the same organisation in another state, where the offices are distinct persons under section 25 of the CGST Act. It is relevant background on domestic inter-office GST treatment. Its stated subject is not the distinct question Nasscom raised about Indian services supplied to overseas customers through foreign branches, so it does not, on its face, resolve that concern.
GST Council material on credit allocation and valuation
Materials for the GST Council’s 52nd meeting discuss making the Input Service Distributor procedure mandatory prospectively for certain third-party input services procured by a head office and attributable to branches, including services liable to reverse charge. They also discuss valuation of internally generated services between offices. Those issues provide context for domestic input tax credit allocation and valuation; they should not be confused with a decision on the 2026 cross-border export concern.
Why Nasscom says clarity matters
Nasscom vice president and head of public policy Ashish Aggarwal told Moneycontrol: “Clarity on this would support competitiveness, release working capital and reduce the litigation the industry has faced over the years.” That is Nasscom’s stated case for reform, not a quantified estimate of the proposal’s economic effect. Moneycontrol, October 7, 2026.
The issue predates the October submission. Nasscom’s June 2025 public policy highlights record that the organisation discussed complexities faced by IT and IT-enabled services companies operating through overseas branch offices with the Revenue Secretary in May 2025. The available reporting does not establish a specific cost, frequency of disputes, or total working capital tied up by the issue.
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The key next evidence is an official Council outcome or subsequent government guidance. The October 5 submission’s exact proposed wording is also not established by the available reporting. Until official documents clarify the position, businesses should distinguish the reported industry concern from the existing domestic inter-office rules and avoid assuming that every overseas branch arrangement has the same treatment.
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