Key Budget 2026 GST/IGST Amendments Affecting Exports
A. Intermediary & Financial Services as Exports
Traditionally, intermediary or brokerage services supplied from India to foreign clients were treated ambiguously for GST (often attracting 18% GST because the place of supply was seen as India).
Budget 2026 proposes to change this by:
- Omitting clause (b) of Section 13(8) of IGST Act, which dealt specially with intermediary services.
- Instead, the place of supply for these services will now be determined under the general rule (location of recipient) — meaning if the recipient is abroad, the service is treated as an export.
📌 Impact:
- Indian brokers, financial intermediaries and agents can treat services to foreign clients as zero-rated exports, meaning no GST charged and ITC refundable.
- For example, Indian agents earning foreign commission benefit from applying zero GST with Letter of Undertaking (LUT) — increasing competitiveness abroad.
This amendment is one of the notable export-related reforms under Budget 2026 and removes a longstanding compliance hurdle for service exporters.
B. GST Refund Process Improvements
GST refunds are a vital part of export competitiveness because exporters must recover the input tax credit (ITC) they paid on inputs and services. Budget 2026 makes the refund process more efficient by:
- Extending provisional refunds (up to ~90%) for inverted duty cases (helps cash flow for sectors where input taxes are higher than output taxes).
- Removing the minimum threshold limit for export refund claims — exporters can claim GST refunds regardless of refund amount, aiding smaller exporters.
📌 Why this matters:
Faster and more predictable refunds enhance working capital and reduce financing costs for exporters, particularly MSMEs and small firms.
C. Other GST/IGST Clarifications Helpful to Exporters
Post-sale discounts & valuation adjustments under GST:
- Budget 2026 clarifies that post-sale discounts (e.g., rebates given after invoices) can be excluded from the GST taxable value even if not pre-agreed in a contract, so long as a credit note is issued and the recipient reverses the ITC.
- This reduces disputes on valuation — common in export pricing.
