Union Budget 2026: Pre-Budget Expectations on GST Reforms

Pursuant to the recommendations of the 56th GST Council meeting, several important legislative amendments are expected to be introduced through Union Budget 2026. These changes aim to improve export competitiveness, simplify valuation rules, reduce disputes, and ease compliance—particularly for small businesses and exporters.

The following GST amendments are expected to materially impact trade, services, and refund mechanisms.

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Amendment to Place of Supply Rules for Intermediary Services (IGST Act)

At its 56th meeting, the GST Council recommended deletion of section 13(8)(b) of the Integrated Goods and Services Tax (IGST) Act, 2017.

Current Position

• Intermediary services are deemed to be supplied at the location of the supplier, even when services are rendered to overseas clients.
• This results in GST liability in India and denial of export benefits.

Expected Amendment

• Deletion of section 13(8)(b) of the IGST Act.
• Place of supply for intermediary services to be determined under section 13(2), i.e. the location of the recipient of services.

Impact

• Indian intermediary service providers will qualify as exporters.
• Eligibility for export benefits such as zero-rating and refunds.
• Reduction in long-standing litigation and constitutional challenges around intermediary taxation.

This amendment is expected to significantly improve India’s competitiveness in global services exports.