Library / Goods and Services Tax: The Professional's Master Guide

13. Place of Supply: Cross-Border Services (IGST Section 13) and OIDAR

Section 13 of the IGST Act applies where the location of the supplier or the location of the recipient is outside India. For an Indian supplier, it decides whether the service can be an export, which needs a place of supply outside India. For an Indian recipient, it decides whether a service from abroad is an import taxable under reverse charge. A service with its place of supply in India remains taxable in India even though the customer is abroad and pays in foreign currency.

13.1 General rule and performance-based services

The general rule in section 13(2) is the location of the recipient; if that is not available in the ordinary course of business, the location of the supplier. Advisory, software development, design, marketing support and back-office services to foreign clients usually fall here.

Section 13(3) overrides the general rule for two kinds of services where the place of performance is what matters:

Services on goods (section 13(3)(a)): services in respect of goods that the recipient must make physically available to the supplier, such as repair, testing, inspection, packing and job work. Place of supply is where the services are actually performed. Where such services are provided from a remote location by electronic means, place of supply is where the goods are situated at the time of supply. The clause does not apply to goods temporarily imported into India for repairs or any other treatment or process and exported after that without being put to any other use in India; for these the general rule applies.
Services needing physical presence (section 13(3)(b)): services to an individual that require the physical presence of the recipient, or a person acting on his behalf, with the supplier, such as in-person training, coaching or cosmetic treatment. Place of supply is where performed.

Illustration 75: Testing, remote repair and temporary import

Case A: a US drug company sends samples to a Hyderabad laboratory for stability testing. Fee Rs. 5,00,000. The samples are made physically available, so place of supply is India, where the tests are done (section 13(3)(a)). The lab is in Telangana, so the supply is intra-State: CGST Rs. 45,000 + SGST Rs. 45,000. It is not an export though the client is abroad.

Case B: a Pune firm fixes the control software of a packaging line installed in Germany by logging in remotely. Place of supply is Germany, where the goods are (first proviso). Export if other conditions are met.

Case C: a Kenyan company ships a turbine to a Vadodara workshop for overhaul; it is re-exported after repair and not used in India. The second proviso takes the service out of section 13(3)(a). Under section 13(2), place of supply is Kenya, so the service can be an export.

13.2 Immovable property, events and multiple locations

For services directly in relation to immovable property, including hotel accommodation and the services of architects, engineers and estate agents, the place of supply is where the property is located or intended to be located (section 13(4)). For admission to or organisation of an event, including ancillary services, it is where the event is actually held (section 13(5)). If a service under section 13(3), (4) or (5) is supplied at more than one location including a location in India, the place of supply is the location in India (section 13(6)). If it covers more than one State in India, the value is split among them in proportion to the contract or on a reasonable basis (section 13(7)).

Illustration 76: Architectural services across the border

Case A: Shah Design Studio, Ahmedabad, designs a hotel in Dubai for a Dubai developer. Place of supply is Dubai, where the property is (section 13(4)): export.

Case B: a Singapore architect designs a factory in Sanand for Patel Auto Components Pvt. Ltd. Fee USD 30,000 at Rs. 86 = Rs. 25,80,000. Place of supply is India, so this is an import of services. Patel pays IGST under reverse charge = Rs. 4,64,400 in cash and takes credit of the same amount.

Illustration 77: Event held partly in India

Utsav Events, Mumbai, organises product launches in Mumbai and Singapore for a German company for a single fee of Rs. 60,00,000.

Because one location is in India, section 13(6) fixes the place of supply for the whole fee in India, here Maharashtra. Tax = CGST Rs. 5,40,000 + SGST Rs. 5,40,000.

13.3 Location of supplier cases (Section 13(8))

Section 13(8) keeps the place of supply at the location of the supplier for: (a) services supplied by a banking company, financial institution or NBFC to account holders; and (c) hiring of means of transport, including yachts but excluding aircraft and vessels, for a period up to one month. "Account" in clause (a) means an account bearing interest to the depositor, including NRE and NRO accounts. Account charges collected by an Indian bank from an NRI customer are therefore taxable in India.

Illustration 78: Self-drive car for a foreign tourist

Coastal Rentals, Goa, hires a small petrol car without driver to a British tourist for 12 days for Rs. 36,000. Renting without operator follows the rate of the goods, here 18%.

Place of supply is Goa, the location of the supplier (section 13(8)(c)). CGST Rs. 3,240 + SGST Rs. 3,240 = Rs. 6,480. For a hire of more than one month to a foreign company, the general rule in section 13(2) would apply instead.

13.4 Intermediary services after the Finance Act, 2026

An intermediary is a broker, agent or any other person who arranges or facilitates a supply of goods, services or securities between two or more persons, but not a person who supplies them on his own account (section 2(13)). CBIC Circular 159/15/2021-GST explained that there must be at least three parties and two distinct supplies (the main supply and the facilitation), and that a person who sub-contracts the main supply is not an intermediary.

Until 29 March 2026, section 13(8)(b) fixed the place of supply of intermediary services at the location of the supplier. An Indian agent earning commission in foreign currency from a foreign principal therefore could not export: he paid CGST and SGST on it, and his foreign client could not use that tax. The Finance Act, 2026 omitted clause (b) with effect from 30 March 2026. The general rule in section 13(2) now applies: place of supply is the location of the recipient.

Situation	Up to 29 March 2026	From 30 March 2026
Indian agent, foreign principal	Place of supply India; CGST + SGST	Place of supply outside India; export if section 2(6) conditions met
Foreign agent, Indian principal (for example, overseas sales agent of an Indian exporter)	Place of supply outside India; not taxable in India	Place of supply India; import of services, IGST under reverse charge
Indian agent, Indian principal	Section 12(2)	Section 12(2) (no change)

Illustration 79: Commission agent before and after 30 March 2026

Mehta Trade Links, Surat, earns commission of USD 10,000 (Rs. 8,60,000 at Rs. 86) from a Chinese fabric mill for arranging sales to Indian buyers.

Step 1 (time of supply up to 29 March 2026): place of supply Gujarat. CGST Rs. 77,400 + SGST Rs. 77,400 = Rs. 1,54,800 payable.

Step 2 (time of supply on or after 30 March 2026): place of supply China. The commission is received in USD and Mehta is not an establishment of the mill, so it is an export under LUT; ITC on Mehta's costs becomes refundable under rule 89(4).

Step 3 (the reverse case): Sagar Exports, Rajkot, pays Rs. 5,00,000 commission to a Dubai agent after 30 March 2026. Place of supply is India, so Sagar pays IGST of Rs. 90,000 under reverse charge and takes credit of it. Exporters with foreign agents must add this to their monthly reverse charge list.

Judicial view: Validity of the old intermediary rule

Material Recycling Association of India v. Union of India (Gujarat High Court, 2020): upheld section 13(8)(b) of the IGST Act, holding that Parliament could fix the place of supply of intermediary services at the location of the supplier.

Dharmendra M. Jani v. Union of India (Bombay High Court, 2023): after a split verdict in 2021, the third judge and then the Division Bench upheld section 13(8)(b) and section 8(2) of the IGST Act. These rulings now matter only for periods up to 29 March 2026; the Finance Act, 2026 has removed the provision prospectively.

Judicial view: Who is an intermediary

Ernst and Young Ltd. v. Additional Commissioner, CGST Appeals-II, Delhi (Delhi High Court, 2023): the Indian branch of a UK company that supplied professional services on its own account to overseas EY member firms was not an intermediary, and those member firms, being separate legal entities, were not establishments of the same person. The services were exports and refund of ITC was allowed. The ruling remains useful for identifying intermediaries and on the "same person" condition in section 2(6).

13.5 Transport services

Section 13(9), which made the destination of the goods the place of supply for transport of goods other than by mail or courier, was omitted by the Finance Act, 2023 from 1 October 2023. Transport of goods, like mail and courier, now follows the general rule in section 13(2): the location of the recipient. An Indian transporter carrying goods for a foreign customer can therefore export the service if the other conditions are met. For passenger transport, it is the place where the passenger embarks on the conveyance for a continuous journey (section 13(10)), and for services on board a conveyance, the first scheduled point of departure (section 13(11)). A Delhi to London ticket sold by a foreign airline therefore has its place of supply in India.

13.6 Online information and database access or retrieval (OIDAR) services

OIDAR services are defined in section 2(17) of the IGST Act. After the Finance Act, 2023 amendment (effective 1 October 2023), they are services whose delivery is mediated by information technology over the internet or an electronic network and whose nature makes supply impossible without information technology. The earlier requirement that the service be "essentially automated and involving minimal human intervention" was dropped. Examples: cloud services, software and app subscriptions, e-books, music and video streaming, online advertising, digital data storage and online gaming.

Place of supply of OIDAR services is the location of the recipient (section 13(12)). Who pays the tax depends on the recipient:

Recipient in India	Who pays	How
Non-taxable online recipient (any unregistered person, including a person registered only as a TDS deductor)	Foreign supplier	Registers under the simplified scheme (rule 14, REG-10), pays IGST, files GSTR-5A monthly
Registered person	Recipient	IGST under reverse charge, paid in cash, credit as per section 16

Before 1 October 2023 an unregistered person was a non-taxable online recipient only if the service was not for business. The Finance Act, 2023 removed that test, so every unregistered recipient in India is covered. Under section 14, the foreign supplier treats a recipient as located in India if any two non-contradictory facts point there, such as the billing address, the card or bank account used, the IP address of the device, or the SIM country code.

Illustration 80: Foreign software subscription

A Singapore company sells a design software subscription at Rs. 12,000 a year plus 18% IGST.

Case A: Priya, a freelance designer who is not registered, buys it. She is a non-taxable online recipient. The Singapore company must be registered in India and pays IGST of Rs. 2,160 through GSTR-5A.

Case B: Sharma Textiles Pvt. Ltd. (registered) buys it. The supplier charges no tax. Sharma pays IGST of Rs. 2,160 under reverse charge in cash and takes credit of Rs. 2,160 in the same return.

Chapter summary

• Section 13 applies where the supplier or the recipient is outside India and decides whether a service is an export or an import.

• General rule: location of recipient. Services on goods physically made available and services needing physical presence: where performed, with a remote-location rule and a carve-out for goods temporarily imported for repair or other treatment.

• Immovable property: where the property is; events: where held; if one location is in India, the whole place of supply is in India.

• Location of the supplier applies to bank services to account holders and to hiring of means of transport for up to one month.

• From 30 March 2026 intermediary services follow the location of the recipient: Indian agents of foreign principals can export, and commission paid to foreign agents is an import under reverse charge.

• Goods transport: location of the recipient, since section 13(9) was omitted from 1 October 2023; passenger transport: place of embarkation.

• OIDAR: location of recipient; foreign suppliers pay IGST on supplies to any unregistered recipient in India, while registered recipients pay under reverse charge.