Query
Query by: Sachin Aggarwal, Chartered Accountant
Kindly throw some light on which services are covered under 'intermediary services' as discussed in section 13 of the IGST Act. Will an invoice raised towards professional charges for marketing research be covered under intermediary services? This invoice is not based on the quantum of sales facilitated by the Indian supplier for the foreign recipient.
Reply
On the facts stated, a fixed professional fee for marketing research supplied to a foreign client is not an intermediary service.
Section 2(13) of the IGST Act defines an “intermediary” as a broker, agent or any other person who arranges or facilitates the supply of goods, services or securities between two or more persons, but excludes a person who supplies them on his own account. Circular No. 159/15/2021-GST dated 20-09-2021 clarifies that the concept requires at least three parties and two distinct supplies, namely a main supply between two principals and an ancillary supply of arranging it; a principal-to-principal supply falls outside. Typical intermediaries are commission agents, brokers and sales or procurement agents. Marketing research delivered as your own output to the client is a main supply on own account. That the fee is not linked to sales supports this view, though the terms of the contract are decisive (Genpact India Pvt. Ltd. v. Union of India, Punjab and Haryana High Court, 11-11-2022).
The place of supply is therefore the location of the recipient under section 13(2), and the supply is an export if the conditions of section 2(6) are met. Section 13(8)(b), which fixed the place of supply of intermediary services at the supplier’s location, was omitted by section 157 of the Finance Act, 2026 with effect from 30-03-2026, so the classification matters mainly for earlier periods.
Ensure that the agreement does not oblige you to solicit customers or to negotiate or conclude sales on the client’s behalf.
Replied by: Adv. Gaurav Gupta
Disclaimer: This reply is a limited, prima facie view given only on the basis of the brief facts stated in the query. It is not a detailed or formal opinion, which would require further and expanded facts and examination of the relevant documents. It should not be acted upon as a substitute for professional advice, and neither the expert nor GST Indiaguide accepts any liability for any action taken on the basis of this reply.
