Most coverage of the 8 October meeting leads with arrest powers. For a group headquartered outside India, four quieter decisions matter more — the export-of-services test, place of supply for work done on goods, SEZ and FTWZ deliveries, and how intellectual property is characterised.
India's GST Council met on 8 October 2026 and recommended the widest set of process changes since the tax was introduced. Most reporting has led with the withdrawal of the power to arrest, which is genuinely significant. For a group headquartered outside India, however, four quieter decisions will do more work.
One caveat frames all of it. A Council recommendation is not law. It takes effect when the Act is amended, the Rules are notified or the Board issues the circular, and until then the existing provision applies unchanged. Nothing below should be built into a filing position yet.
The export-of-services test is being narrowed in your favour
Under section 2(6) of the IGST Act, a supply qualifies as an export of services only if several conditions are met. One of them — sub-clause (v) — disqualifies a supply where the supplier and recipient are merely establishments of the same person, read with Explanation 1 to section 8. The Council has recommended that it be omitted.
For anyone running a captive in India, this is the most consequential item in the list. Indian branches, project offices and global capability centres serving their own overseas parent have long sat awkwardly against that test, with zero-rating denied on the ground that the two sides are one person. Removing the condition opens the question again.
It does not settle it. Every other limb of section 2(6) survives: the supplier in India, the recipient outside India, the place of supply outside India, and payment in convertible foreign exchange or in rupees where the Reserve Bank permits. On that last point the Council has separately recommended a circular clarifying receipt in foreign exchange or in Indian rupees for exports, which removes a different and frequently litigated doubt.
Work performed in India on goods a foreign customer sends you
Section 13(3)(a) of the IGST Act fixes the place of supply, for services requiring goods to be made physically available by the recipient, at the location where the services are performed. For a testing laboratory, a calibration house, a repair facility or a contract research organisation working on items shipped in by a foreign principal, that has meant an Indian place of supply and a domestic tax charge on work that is economically an export.
The Council has recommended that sub-clause be omitted, which returns these supplies to the default in section 13(2) — the location of the recipient.
The effect could be substantial for engineering services, inspection and certification, R&D under contract, and aftermarket repair hubs. As always the contract and the facts decide: who the recipient is, where they are established, and on whose account the work is done.
Goods delivered into an SEZ or FTWZ for an overseas buyer
An explanation is proposed in section 16(1) of the IGST Act: where goods are supplied to a buyer outside India but delivered in India into a Special Economic Zone or a Free Trade Warehousing Zone, and payment is received in convertible foreign exchange or in rupees where the Reserve Bank permits, the supply is to be treated as a supply to an SEZ or FTWZ.
This addresses a structure that international traders use constantly and that the law has never comfortably described. Keep the delivery evidence, the sale contract, the identity of the purchaser and the remittance record together — the deeming will turn on exactly those facts.
Intellectual property: one answer instead of two
Transfer of title in intellectual property has been characterised inconsistently, with a temporary transfer treated as a service and a permanent transfer argued as a supply of goods. The Council has recommended amending Schedule II so that transfer of title in intellectual property rights, whether temporary or permanent, is uniformly a supply of services.
For technology, media, pharmaceutical and licensing groups this removes a classification risk that has sat under cross-border royalty and assignment arrangements for years. Existing intra-group IP agreements with an Indian leg are worth re-reading once the amendment is published.
Working capital that has been stranded
Two refund changes carry dated eligibility, and both favour capital-intensive and export-facing businesses:
- 1 November 2026, input services. Credit availed on or after this date is proposed to enter inverted-duty refund claims. Input services have been excluded from that computation since the beginning, and the exclusion survived constitutional challenge.
- 1 April 2027, capital goods. Credit on eligible capital goods availed on or after this date is proposed to become refundable for zero-rated and inverted-duty claims, spread across sixty months.
Alongside them, the 1.5 times domestic-value cap on zero-rated turnover in Rule 89(4)(C) is to be removed, which matters wherever a group's export price sits above its domestic comparable — a routine feature of transfer-pricing-driven sales. Rule 96(10) is to be omitted retrospectively from 23 October 2017, following the Supreme Court, which bears on exporters carrying open proceedings under it.
Ninety per cent of a zero-rated claim is also to be sanctioned provisionally and automatically on system risk checks, with the acknowledgement window cut from fifteen days to ten.
E-invoicing reaches the import of services
E-invoicing is to be extended to the import of services, and to domestic supplies from unregistered persons taxed under reverse charge, for taxpayers with aggregate turnover of Rs 5 crore and above.
Any foreign group that charges management fees, software licences, technical services or cost allocations to an Indian subsidiary should read that twice. The obligation falls on the Indian recipient, but it will reshape intra-group invoicing calendars, documentation and system interfaces on both sides.
Arrest powers, and what a board should take from it
Section 69 of the CGST Act is to be omitted entirely. The prosecution threshold rises from Rs 1 crore to Rs 5 crore, and the credit offence in section 132(1)(c) is narrowed to fraudulent availment without receipt of goods or services or without an invoice.
For boards weighing officer and director exposure in India, this is a material change in the risk profile of an ordinary tax dispute. It should not be overstated. Investigation, summons, audit, adjudication, recovery and penalty are untouched, prosecution survives above the new threshold, and a proposed validation clause would revive notices that courts had struck down for spanning several financial years at once.
What this does not change
Removing the distinct-establishment condition does not make every intra-group service an export. Omitting section 13(3)(a) does not make every service performed in India an export. The SEZ and FTWZ explanation does not dispense with evidence. In each case the recommendation removes one obstacle; the remaining conditions stand, and each supply still needs its own analysis of recipient, place of supply and consideration.
What to do now
- Re-run the export-of-services analysis for any Indian establishment serving its own overseas group, on the assumption that sub-clause (v) is gone.
- Identify Indian-performed services on customer-supplied goods currently treated as domestic supplies.
- Review intra-group IP agreements with an Indian leg against uniform characterisation as a service.
- Quantify input-service credit from 1 November 2026 and capital-goods credit from 1 April 2027.
- Map intra-group charges into India against the Rs 5 crore e-invoicing threshold.
- Treat all of it as planning until the amendment, notification or circular has operative force.
The Press Information Bureau release of 8 October 2026 carries the recommendations in full, and states that only the subsequent amendments, notifications and circulars have the force of law. Alverian advises on cross-border structuring and indirect tax across jurisdictions, drawing on R. K. Chari & Co. for India chartered-accountancy work — see tax and legal services and global capability centres.