New GST Rules Aim to Boost IT Service Exports and Reduce Compliance Costs

New Delhi, October 8 — The GST Council’s latest recommendations, welcomed by Nasscom, are set to transform the landscape for India’s IT services exporters. By classifying services supplied by Indian firms through their foreign branches as bona‑fide exports, the new rules remove a regulatory obstacle that previously prevented such transactions from qualifying for export benefits.

Nasscom stressed that the amendment will lower tax‑related uncertainty, cut down litigation risks and free up working capital for IT companies that serve overseas clients via offshore subsidiaries. The change aligns with earlier industry pleas for clearer export definitions.

In parallel, the council suggested revising the place‑of‑supply provisions for research, testing, certification and engineering services rendered on foreign‑owned goods within India. This revision is expected to benefit engineering R&D firms, global capability centres and deep‑tech start‑ups that provide high‑value technical services to overseas customers, thereby enhancing India’s attractiveness as a global engineering hub.

For the e‑commerce sector, a simplified GST registration process for small sellers using warehouses in other states was introduced. The measure aims to eliminate the need for multiple state‑wise registrations, facilitating smoother interstate online commerce for micro‑entrepreneurs.

Additional recommendations include extending the inverted‑duty refund mechanism to input services, broadening refund eligibility for plant and machinery, and accelerating refund processing. Allowing input tax credit on employee health and life insurance premiums further addresses a persistent industry grievance.

Collectively, these reforms are projected to reduce the amount of legitimate tax credit locked in business expenses and ease the compliance burden for a wide range of Indian businesses.