- ITeS Services such as call center, business process outsourcing services, etc. “Intermediaries” to overseas entities under GST law and
- whether they qualify to be “export of services” or otherwise.
- As per section 2(13) of the Integrated Goods and Service Tax Act, 2017,
“Intermediary means a broker, an agent or any other person who arranges or facilitates the supply of goods or services or both, or securities, between two or more persons, but does not include a person who supplies such goods or services or both or securities on his own account.”
The definition specifically excludes a person who supplies such goods or services or both or securities on his own account.
Therefore, the supplier of services would not be treated as “intermediary” if he involves in the supply of goods or services or both on his own account.
- As per Safe Harbour Rules, Rule 10 (e) of the Income Tax Rules, defines “Information Technology enabled Services (ITeS services), as
“Business process outsourcing services provided mainly with the assistance or use of IT such as back office operations, data processing, data mining, payroll, website service etc.”
Note : Information Technology enabled Services (ITeS services) are not defined under GST Law.
However, when a supplier of ITeS services located in India supplies services for and on behalf of a client located abroad, these could be various scenarios. These scenarios are explained as below:
- The supplier of ITeS services supplies back end providing the services defined as per rule definition and these services are provided on his own account by such supplier.
- The supplier supplies ITeS services to customers of his clients on the behalf of the clients but actually supplies these services on his own account.
The both the cases, the supplier will not be categorized as intermediary.
For example : a supplier “A” supplying services on his own account to his client “B” or to the customer “C” of his client.
Both these services are not the intermediary.
- The supplier of backend services located in India arranges or facilitates the supply of goods or services or both by the client located abroad to the customers of client.
- Such backend services may include support services, during pre-delivery, delivery and postdelivery of supply.
- The supplier of such services will qualify the definition of intermediary as these services are merely for arranging or facilitating the supply of goods or services or both between two or more persons.
For example : a supplier “A” supplying backend to the customer “C” of his client “B”.
- The supplier of ITeS services supplies back end services on his own account along with arranging or facilitating the supply of various support services.
- In this case, the supplier is supplying two services i.e. ITeS services and various support services to his client or to the customer of the client.
- Whether the supplier of such services would qualify the definition of intermediary will depend on the facts and circumstances of each case.
It would be determined keeping in view which set of services is the principal / main supply.
The CBIC also clarified that, supplier of ITeS services, who is not an intermediary can avail benefits of export of services if he satisfies the criteria mentioned in sub-section (6) of section 2 of the IGST Act.