An overseas sponsor does not automatically make an Indian clinical-trial service an export. The usual cross-border rule places a service where its recipient is located, but statutory exceptions and a pharmaceutical-sector R&D notification may change the result. Export-of-services status is a separate test, and all five conditions must be met.
Start with the recipient and the service being supplied
Identify the legal person supplying each service and the legal person receiving it. The sponsor’s overseas headquarters may not be the relevant recipient if an Indian establishment receives the service. Under sections 2(14) and 2(15) of the Integrated Goods and Services Tax Act, 2017 (IGST Act), the relevant locations depend on the supplier’s and recipient’s places of business or fixed establishments and, where applicable, which establishment is most directly concerned.
Use the contract, work instructions, deliverables, invoicing and payment arrangements to establish the relationship. A trial’s physical location in India, or the sponsor’s foreign incorporation, does not by itself settle who receives each service or where its place of supply is.
How the cross-border place-of-supply rule works
Section 13 applies when either the supplier or recipient is outside India. Under section 13(2), the place of supply for services not covered by the specified exceptions is the recipient’s location. That is the starting point, not an automatic answer for every clinical-trial engagement.
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Relevant exceptions include services to an individual that require the individual’s physical presence with the supplier (section 13(3)), services connected with immovable property (section 13(4)), event services (section 13(5)), and intermediary services (section 13(8)). Section 13(13) also allows the government to notify a place-of-supply rule for specified services.
Distinguish sponsor-facing work from participant-facing care
Clinical-trial engagements can combine distinct supplies. For example, an Indian provider may perform trial management or research work for a sponsor, while a site or clinician performs medical procedures for participants. Treat the actual service bundle—not the broad label “clinical trial”—as the unit of analysis where the contract and invoices support that separation.
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Section 13(3)(b) concerns a service supplied to an individual, represented as the recipient or someone acting on the recipient’s behalf, that requires that individual’s physical presence with the supplier. The fact that trial procedures take place in India does not, by itself, establish that a separate sponsor-facing research or CRO service has its place of supply in India. Determine who receives the particular service and whether the statutory physical-presence test applies to it.
Check the pharmaceutical R&D notification before relying on the default
CBIC’s Integrated Tax Notifications index identifies Notification No. 4/2019-Integrated Tax, dated 30 September 2019, as concerning the place of supply of pharmaceutical-sector R&D services under section 13(13). That makes the notification a material issue for some clinical-trial work. The index entry alone does not establish that every trial service is covered or determine how a particular contract fits its scope.
Before reaching a conclusion, obtain and review the operative notification text and any amendments. In particular, confirm whether the service actually supplied falls within the notification’s defined categories and conditions. CBIC’s index also lists Notification No. 2/2020-Integrated Tax, dated 26 February 2020, as an amendment concerning B2B MRO services; that subject is distinct from clinical-trial R&D.
Test export-of-services status separately
Even if the place of supply is outside India under section 13(2) or an applicable notification, the supply qualifies as an export of services only if it meets every condition in IGST Act section 2(6):
- The supplier is located in India.
- The recipient is located outside India.
- The place of supply is outside India.
- The supplier receives payment in convertible foreign exchange.
- The supplier and recipient are not merely establishments of a distinct person under the Act.
A foreign sponsor’s incorporation or address proves neither the recipient’s location for the service nor the other conditions. Keep the contract and invoices, evidence showing which establishment received the work, remittance records, and information about any relationship between the supplier and recipient. CBIC’s FAQ on export of services also describes the statutory conditions and how supplier and recipient locations are determined.
Compare the factual characterizations that can change the result
| Issue | What to establish | Potential place-of-supply consequence |
|---|---|---|
| Own-account research or trial service | Whether the Indian provider supplies its own contractual service to the sponsor. | Section 13(2) is the general cross-border rule unless a specific exception or notification applies. |
| Intermediary service | Whether the provider arranges or facilitates a supply between other persons, rather than supplying the relevant service on its own account. | Under section 13(8)(b), the place of supply is the supplier’s location. |
| Participant-facing procedure | Whether the service is supplied to an individual and requires that individual’s physical presence with the supplier. | Section 13(3)(b) may be relevant; participant activity alone does not decide the place of supply for a distinct sponsor-facing service. |
| Pharmaceutical-sector R&D | Whether the actual service meets the operative terms and conditions of Notification No. 4/2019-Integrated Tax. | A section 13(13) notification may displace the general rule; confirm its scope before applying it. |
| Indian recipient establishment | Whether an Indian establishment of the sponsor receives the service or is most directly concerned. | The relevant recipient location may not be the sponsor’s overseas headquarters. |
Assess intermediary status by function, not by the CRO label
Section 2(13) defines an intermediary to include a broker, agent or other person who arranges or facilitates a supply between two or more persons, while excluding a person supplying the relevant goods or services on its own account. A CRO does not become an intermediary merely because it coordinates investigators, sites, vendors or participants. Examine what the provider promises to deliver, whose supply it arranges (if any), and the contractual relationships among the parties.
Account for offshore subcontractors separately
An Indian exporter’s use of an overseas subcontractor can raise separate import-of-service and reverse-charge questions. CBIC Circular No. 78/52/2018-GST discusses an Indian exporter that supplies a foreign customer partly through a separate overseas supplier. It addresses the Indian exporter’s supply for the full contract value and the import of services for the outsourced portion in the circumstances described in the circular. It also discusses direct payment by the foreign customer to the overseas subcontractor, subject to the circular’s stated reverse-charge and RBI conditions.
That clarification is fact-specific, not a clinical-trial ruling. Identify who contracts with and pays the subcontractor, what service the subcontractor performs, and whether the circumstances match the circular; check for later legal developments before relying on it.
Use this order to review a clinical-trial engagement
- Map the supplies: List each deliverable—such as trial management, protocol or data work, laboratory testing, recruitment, site coordination, medical procedures and pass-through purchases—and identify the entity supplying it.
- Identify the recipient for each supply: Determine which sponsor or other establishment contracts for, directs, receives and uses the service. Check whether an Indian affiliate is actually a recipient rather than simply a site or customer.
- Classify each service: Separate own-account sponsor services from participant-facing health services and from any arrangement or facilitation of another party’s supply.
- Apply section 13: Start with section 13(2), then check the relevant exceptions and whether the pharmaceutical R&D notification applies to the precise service.
- Apply section 2(6): Verify all five export conditions independently, including the payment route and any distinct-person relationship.
- Review outsourcing: Identify foreign subcontractors, their services and payment flows, and assess any import-of-service or reverse-charge implications against the applicable rules and circular.
The applicable GST treatment depends on the contract, service bundle, recipient establishment, notification scope, payment flow and group-company facts. This framework cannot determine the result for an engagement without those details.
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