GST Council's likely agenda: Intermediaries may get exporter status

The upcoming 56th Goods and Services Tax (GST) Council meeting may approve a proposal reclassifying intermediaries — including brokers, agents, and digital platforms — as exporters, granting their services a zero-rated status, said a senior government official.

 

The move is aimed at alleviating an 18 per cent GST burden on such entities. The issue is likely to be taken up for final approval after the Law Committee’s nod, paving the way for significant financial relief to such firms.

 

“With the Law Committee’s approval expected shortly, the GST Council’s final decision in its next meeting could mark a turning point for India’s intermediary-driven export sectors,” said the official.

 

Currently, intermediary services fall in the 18 per cent GST slab under the Central GST Act.

 

The amendment proposes deleting Section 13(8)(b) of the Integrated GST (IGST) Act, which currently mandates that the place of supply for intermediary services be deemed as India, thereby subjecting them to domestic taxation.

 

Once revised, these services will qualify as exports, making them zero-rated, enabling businesses to claim refunds on input taxes.

 

“This reform will level the playing field for Indian intermediaries competing globally, as foreign clients often cannot claim input tax credit on GST charged here,” the official stated.

 

The change could also resolve pending show-cause notices totaling ₹3,357 crore issued to intermediaries, primarily in sectors like textiles and commodities trading, said sources in the know.

 

Tax experts underscored the amendment’s alignment with global practices. “Intermediary services should inherently qualify as exports under IGST. The current provision creates an undue tax burden, which this correction addresses,” said Vivek Jalan, Partner at Tax Connect Advisory. 

 

Separately, Finance Minister Nirmala Sitharaman is likely to urge states in the upcoming GST Council meeting to align their GST registration procedures with the streamlined norms recently issued for CGST officers by the Central Board of Indirect Taxes and Customs (CBIC), a senior government official told Business Standard.

 

Although GST is a unified tax in structure, it is jointly administered by the Centre and the states.

 

In April, the CBIC had issued detailed instructions to CGST officers, aimed at curbing discretionary practices in processing registration applications.

 

The guidelines clarified that only documents listed in Form GST REG-01 should be sought and directed officers to avoid irrelevant or presumptive queries.

 

They also laid down strict timelines — seven working days for standard applications and up to 30 days for high-risk cases requiring physical verification.

 

“The finance minister will nudge states to follow the same registration guidelines in spirit and practice. GST is a shared responsibility, and there needs to be uniformity in how rules are implemented,” the official said.

 

The official added that early signs of implementation at the central level are encouraging.

 

“We are seeing positive traction in registration numbers, though we don’t have consolidated data yet as it has only been a month.

 

We will also ask states to share their numbers to assess the broader impact,” the official added.