In India, a foreign sponsor does not automatically make clinical-trial services an export. An Indian supplier must meet all five conditions in the IGST Act’s export-of-services definition, including that the place of supply is outside India. A domestic sponsor cannot meet the recipient-outside-India condition, so the export route is unavailable. The GST result for either arrangement depends on the actual service, place-of-supply rule, supplier and recipient locations, and applicable classification.
Does a foreign sponsor make clinical research an export of services?
No—not by itself. Under Section 2(6) of the IGST Act, all five conditions below must be met for a service supplied from India to qualify as an export:
- The supplier is located in India.
- The recipient is located outside India.
- The place of supply is outside India.
- Consideration is received in convertible foreign exchange or in Indian rupees wherever permitted by the Reserve Bank of India.
- The supplier and recipient are not merely establishments of a distinct person under the statutory explanation.
These requirements are cumulative. A foreign recipient or payment in foreign currency cannot cure a place of supply in India or a failure to meet another condition. If the supply qualifies as an export, it is zero-rated. CBIC’s Sectoral FAQs describe routes that include supply under a bond or letter of undertaking with a claim for eligible input-tax-credit refund, or payment of integrated tax followed by a refund claim, subject to applicable requirements.
How does the place of supply affect clinical-trial work?
The key question is what the supplier actually does and what inputs the arrangement requires—not simply where the sponsor is based. Section 13(3)(a) can apply where a service is supplied in respect of goods that the recipient must make physically available to the supplier, or to someone acting on the supplier’s behalf, to provide the service. On facts where that rule applies, the place of supply may be in India.
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What the Cliantha Research ruling decided
In its order dated 4 May 2019, the Maharashtra Authority for Advance Ruling considered Cliantha Research Limited’s proposed clinical research and support services for entities in India and abroad, supplied from Maharashtra. The described arrangement involved investigational goods supplied by the sponsor and research services performed in India. The authority applied Section 13(3)(a), treated the place of supply as India, and rejected export treatment under Section 2(6). Because the supplier location and place of supply were both in Maharashtra in the arrangement considered, it found CGST and Maharashtra SGST payable.
That decision concerns the applicant and the arrangement described in the order; it is not a blanket ruling that every clinical-trial service for an overseas sponsor is taxable in the same way. A different scope of work or set of facts may require a different place-of-supply analysis.
Facts to examine in another contract
- Which goods, if any, does the sponsor provide, and are they made physically available to the Indian supplier for the service?
- What research, testing, support, or other work does the supplier undertake, and where is each part performed?
- Does Section 13(3)(a) apply, or does another place-of-supply rule govern the particular service?
- Where are the supplier and recipient located, and are they separate persons rather than distinct establishments of the same person?
- How is consideration received, and is the method permitted for the export condition?
How do overseas and domestic sponsor arrangements compare?
| Issue | Overseas sponsor | Domestic sponsor |
|---|---|---|
| Recipient-location condition | May be satisfied if the recipient is located outside India; verify the actual recipient and the distinct-establishment rule. | Not satisfied when the recipient is located in India, so the export-of-services route is unavailable. |
| Place of supply | Must be outside India for export status. The Cliantha arrangement was treated as having a place of supply in India under Section 13(3)(a). | Determine under the rule applicable to the particular service and contract. |
| Sponsor-provided goods | Whether goods are made physically available to the supplier can matter to the place-of-supply analysis; this was material in Cliantha. | Assess the same contract-specific facts; sponsor location alone does not decide the place of supply. |
| Payment condition | Export status requires receipt in convertible foreign exchange or in Indian rupees where RBI permits it. | Does not create an export; the recipient-location condition already prevents that route. |
| GST treatment | If every export condition is met, the service is zero-rated. If not, determine domestic tax treatment under the applicable place-of-supply and rate rules. | Determine domestic classification, applicable rate, and whether CGST plus SGST or IGST applies from the relevant locations and rules. |
What rate may apply to clinical-trial services?
CBIC’s GST rates schedule lists research and development services under heading 9981 at 9% central tax plus 9% state tax, or 18% integrated tax as applicable. This entry is not a universal classification ruling for every clinical-trial arrangement. Confirm that the actual contracted supply falls within the relevant entry and check the current rate notifications before invoicing; a clinical-trial contract may include services whose classification needs separate assessment.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.How should an Indian supplier assess a contract?
- Identify the supply and recipient. Separate the contracted research, testing, and support work as needed, and establish who receives each service and where that recipient is located.
- Determine the place of supply. Review the work performed, goods involved, and applicable IGST Act rule. Do not assume that an overseas address determines the result.
- Apply all export conditions. For an overseas recipient, check every Section 2(6) requirement, including receipt of consideration and whether the parties are distinct establishments.
- Classify and calculate domestic GST if export treatment fails or is unavailable. Verify the rate entry for the specific supply and determine whether CGST plus SGST or IGST applies based on the relevant locations.
- Document the conclusion. Keep the contract, scope of work, details of sponsor-provided goods, performance locations, recipient and establishment details, and payment terms supporting the tax treatment.
The Cliantha order and the CBIC materials cited here describe the rules and rate entry discussed above. Because tax law, notifications, and interpretations can change, check the current provisions against the contract before adopting a GST position.
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