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Indian businesses that serve clients in overseas countries should be aware about rules relating to GST. In the few years the number of businesses that do work for clients in other countries has grown a lot. One thing that people often do not understand about GST regime is the taxation of intermediary services under GST.

Many businesses think that if they do work for clients in countries, they do not have to pay tax.This is not true. The rules for services are different from the rules for other kinds of work that businesses do for clients in other countries.

Whether a service qualifies as an export depends on several statutory conditions, including place of supply. The rules for services are subject to a special place of supply provision under the Integrated Goods and Service Tax (IGST) Act, so even if the client is in another country the work may not be considered an export. This is why it is so important to understand the rules about GST and exports.

At TMWala, we assist businesses, exporters, consultants, startups, and service providers in understanding complex GST provisions relating to cross-border transactions. Our team helps clients determine whether their services qualify as exports, evaluate the applicability of GST on intermediary services, ensure regulatory compliance, and minimize tax risks through practical, business-focused advice.

What Are Intermediary Services Under GST?

The term intermediary services under GST are defined under Section 2(13)[1] of the IGST Act. An intermediary is a broker, agent, or any person who arranges or facilitates the supply of goods, services, or securities between two or more persons but does not supply those goods or services on their own account.

The defining feature of an intermediary is that the person acts as a facilitator between two parties rather than being the principal supplier of the service.

Some common examples include Commission agents, Marketing representatives, Liaison offices, Sourcing agents, Export commission agents

On the other hand, professionals such as software developers, architects, lawyers, accountants, engineers, consultants, and designers who provide services directly to overseas clients on a principal-to-principal basis are generally not treated as intermediaries merely because they deal with foreign customers.

GST On Intermediary Services

The biggest issue relating to GST on intermediary services is the determination of the place of supply.

For most cross-border services, the place of supply is the location of the recipient. However, intermediary services are governed by a special provision under Section 13(8)(b) of the IGST Act, which provides that the place of supply shall be the location of the supplier. This clause was omitted, and intermediary services now follow the general rule under section 13(2)[2] which provides that place of supply is now the location of the recipient.

Export Of Services Under GST

To be considered an export of services for GST all the rules under Section 2(6)[3] of the IGST Act have to be met. These rules are:

• The company that provides the services/supplier is in India.
• The company that gets the services/recipient is outside India.
• The place of supply is outside India.
• The company gets paid in a currency that can be exchanged for other currencies or in another way that is allowed.
• The company that provides the services and the company that gets the services are not the same company with different offices.

When it comes to services that help other companies do business, the rule about where the servicers used is very important. This is because the services are considered to be used in India, where the company that provides them is located. So even if the services are provided to companies in countries, they usually do not qualify as exports.

So, companies should really think about what kind of services they provide, rather than just assuming that every time they do business with a company in another country, it is an export of services. Companies that provide services to countries need to understand the rules about the export of services. The rules for the export of services are important for companies that provide services to other countries.

Understanding GST Zero Rated Supplies

Under Section 16 of the IGST Act, exports are considered GST zero-rated supplies. This is good for exporters because the government wants to make sure they can compete well in markets.

If you are a supplier making zero-rated supplies, you have two options:

• You can export under a Letter of Undertaking (LUT) without paying IGST and then claim back the input tax credit you have not used.
• You can pay IGST on the export. Then claim a refund.

Intermediary services usually do not count as exports because of where the supply is made. This means they are not typically GST zero-rated supplies. So, you may have to charge GST even if your customer is, outside India.

Is There Any GST Export Exemption For Intermediary Services?

Many people who pay taxes look for a way to avoid paying GST when they export intermediary services. You need to know that just because the person buying the service is outside India, it does not mean you do not have to pay GST.

The tax rules depend on what the service is. If you are just helping two other companies do business with each other, then your service is probably a service and you must pay tax in India.

If you are doing the work on your own and not just acting as a middleman, then it might not be considered an intermediary service. In these cases, if you meet all the requirements for exporting a service, you might not have to pay GST. This is because your service could be considered an export, and exports do not have to pay GST.

So, it is very important to figure out if your service is really a service before you try to avoid paying GST when you export it. You need to understand what a GST export exemption is and how it applies to services. Determining if a service is a service is crucial for the GST export exemption.

How To Determine Whether You Are An Intermediary

Businesses that handle cross-border transactions need to review their contracts and actual business activities carefully.

Some key questions to consider are:

• Are you setting up? Helping with a deal between two parties?
• Do you get paid a commission when the deal goes through?
• Are you talking contracts on someone’s behalf?
• Are you offering services on your own?
• Who is responsible for delivering the service according to the contract?

The answers to these questions usually help figure out if the service is an intermediary service or an independent export of services.

Just calling a business a “consultant” or “service provider”, in the agreement does not automatically decide how it is treated for GST. Tax authorities look at what’s really happening in the transaction, not just what it is called.

Compliance With GST Export Rules

Proper compliance with GST export rules is essential for businesses engaged in international trade in services.

Businesses should maintain:

• Service agreements clearly defining the scope of work.
• Tax invoices.
• Foreign Inward Remittance Certificates (FIRC), where applicable.
• Bank Realisation Certificates (BRC), if required.
• Letter of Undertaking (LUT) for eligible exports.
• Documentation demonstrating that services are provided on a principal-to-principal basis.

Proper documentation plays a significant role in establishing whether services qualify as exports or are taxable intermediary services.

Common Mistakes Businesses Should Avoid

Many businesses unintentionally create GST exposure due to incorrect classification of services. Some common mistakes include:

• Assuming every foreign client transaction qualifies as an export.
• Ignoring the special place of supply provisions applicable to intermediary services.
• Using agency terminology in agreements, even when providing independent services.
• Claiming benefits available to GST zero-rated supplies without satisfying statutory conditions.
• Maintaining inadequate contractual documentation.
• Failing to review agreements before entering cross-border transactions.

Avoiding these mistakes can significantly reduce litigation and compliance risks.

Conclusion

The tax on services in India is really complicated. When Indian companies export things, they usually do not have to pay tax. This is not the case for intermediary services. These services are treated differently. Are often not considered exports even if the company gets paid in a foreign currency.

Indian companies that provide services to clients in other countries need to be very careful. They should look at their contracts and the work they do to see if they can avoid paying tax on these services. If the services are provided on their own and meet the rules for exporting services, then the company might not have to pay tax. The rules for services are changing all the time, so it is a good idea for companies to get professional help and keep very good records. This way, they can follow the rules. Get the tax benefits they are allowed to have.

If you are uncertain whether your services qualify as intermediary services or exports under GST, book a consultation with TMWala. With expert guidance from TMWala, businesses can confidently navigate complex GST regulations while ensuring compliance and optimizing available tax benefits.

FAQs

1. What are intermediary services under GST?
   Intermediary services involve arranging or facilitating supplies between two or more parties without supplying the goods or services on one’s own account.
2. Is GST applicable to intermediary services?
   Yes, GST generally applies to intermediary services based on the place of supply provisions under the IGST Act.
3. Are intermediary services considered exports?
   Not always. They qualify as exports only if all conditions under the IGST Act are fulfilled.
4. What is the place of supply for intermediary services?
   The place of supply is generally the location of the supplier.
5. Can intermediary services be zero-rated under GST?
   Generally, no. Most intermediary services do not qualify as GST zero-rated supplies due to the place of supply rules.
6. What is the GST export exemption?
   It refers to the benefits available for eligible export transactions that satisfy the conditions prescribed under the GST law.
7. How can I determine if I am an intermediary?
   Review your contract to see whether you facilitate a transaction or provide services independently.
8. Is a foreign currency payment enough to claim export benefits?
   No. All conditions for the export of services under GST must be satisfied.
9. What documents are required for the export of services?
   Typically, invoices, contracts, LUT (where applicable), and foreign remittance documents are required.
10. How can TMwala help with GST compliance?
    TMwala provides GST advisory, export compliance, contract reviews, LUT assistance, and transaction analysis for cross-border services.

[1]Integrated Goods and Services Tax Act, 2017, Section 2(13).

[2]Integrated Goods and Services Tax Act, 2017, Section 13(2).

[3]Integrated Goods and Services Tax Act, 2017, Section 2(6)

A person who is registered under the Goods and Services Tax (GST) law must follow the provisions of the Central Goods and Services Tax (CGST) Act of 2017 and the associated CGST Rules. However, there are situations when GST registration may be cancelled upon the application of either the tax registrant or by the proper authority.

The legal framework that governs GST registration cancellation is given under Section 29 of the CGST Act, 2017, while revocation of cancellation is given under Section 30. The detailed procedure is prescribed under Rules 20, 21, 21A, 22, and 23 of the CGST Rules, 2017. At TMWala, we simplify the GST registration cancellation and revocation process. From assessing eligibility to filing applications and ensuring GST compliance, we will help you navigate every step with confidence.

What Is GST Registration Cancellation?

GST registration cancellation is the procedure whereby the tax authority cancels the registration given to the taxpayer under GST in line with the provisions mentioned in Section 29 of the CGST Act.

After cancellation takes place:

• The registration becomes ineffective.
• The GSTIN assigned becomes inactive.
• The registered individual is not allowed to charge GST on the supply of goods and services that are subject to GST.
• A tax invoice registered person cannot issue after the effective date of cancellation.
• Obligations that arose before the cancellation date of such registered person remain.

Thus, cancellation of registration does not automatically relieve the taxpayer of the obligations that occurred before cancellation of registration.

Who Can Apply For GST Registration Cancellation?

The CGST Act provides for the cancellation of registration in different situations.

An application may be made by:

• The registered taxpayer.
• The legal heirs of a registered proprietor in the event of death.
• The proper officer may also initiate cancellation proceedings on their own motion where the conditions specified under the Act and Rules are satisfied.

The procedure differs depending on whether cancellation is initiated voluntarily by the taxpayer or by the tax authorities.

Circumstances In Which Registration May Be Cancelled

Section 29 of the CGST Act lays down conditions for cancellation of registration of businesses in accordance with the law.

Some of the cases may include:

1. Dissolution or Closure of Business

A registered individual can apply for cancellation of their registration in case of dissolution or permanent closure of the business. In such situations, the taxpayer has to file an application through the GST portal in the prescribed form.

2. Transfer of Business

Cancellation may also happen when the business is transferred by:Sale, Merger, Transfer in other ways. In case of transfer of business to another person, the recipient may be required to get registered as per the provisions of the GST Act.

3. Change in the Structure of Business

Another reason for cancellation may be the change in the structure of the business, which makes it compulsory to obtain new registration as per the GST Act.

4. No more Investigation required

A registered individual can file for cancellation if he/she is no longer required to get registered under the CGST Act.

This may be applicable if the formal requirement of registration does not exist.

Cancellation By The Proper Officer

Apart from applications submitted by taxpayers, the proper officer may cancel registration in the circumstances specified under the Act and the CGST Rules.

Rule 21 of the CGST Rules specifies several situations in which registration is liable to cancellation, including specified contraventions of the GST law by the proper officer. However, before passing a cancellation order, the proper officer is required to follow the procedure laid down under Rule 22.

Generally, the taxpayer is issued a notice in FORM GST REG17 (Show Cause Notice) explaining the grounds on which cancellation is proposed and is provided an opportunity to furnish a reply in FORM GST REG18 within the time prescribed under the Rules. The principles of natural justice are therefore incorporated into the cancellation process by allowing the registered person to respond before a final decision is taken.

If the proper officer is satisfied with the explanation submitted, the proceedings may be dropped. Otherwise, an order cancelling the registration is issued in FORM GST REG19.

How To Cancel GST Registration Online

A person who has a registered GST must apply electronically to discontinue GST registration through the GST portal under the guidelines of Rule 20 of the CGST Rules 2017, and the request for cancellation of GST registration must be filed using FORM GST REG16.

The registered person must mention the exact reason for cancellation of GST registration, the effective date of cancellation, and other required information in the application. The authority concerned checks the application along with the supporting documents and then finally approves/disapproves the request to cancel the registration.

Steps For GST Cancellation Online

The GST registration cancellation process through the online portal involves the following steps:

Step 1: Log in to the GST Portal

The registered taxpayer must log in to the official GST portal using valid credentials.

Step 2: Access the Cancellation Application

The taxpayer needs to navigate to:

Services → Registration → Application for Cancellation of Registration

The cancellation request is submitted electronically through FORM GST REG16.

Step 3: Fill in the required details of the applicant

The applicant must furnish relevant details, including:

• Reason for cancellation of GST registration.
• Date from which cancellation is required.
• Details of stock of inputs, semi-finished goods, finished goods, and capital goods, wherever applicable.
• Details of tax liability payable under GST provisions.

Providing complete and correct information helps avoid delays in processing the application.

Step 4: Verification and Submission

After filling all required information, the application must be verified through the prescribed electronic verification method, such as Digital Signature Certificate (DSC) or Electronic Verification Code (EVC).

Once submitted successfully, an Application Reference Number (ARN) is generated, which can be used to check the GST registration status of the cancellation application.

For more information, visit: https://tutorial.gst.gov.in/userguide/registration/Cancellation_of_Registration_manual.htm

Suspension Of GST Registration

In accordance with Rule 21A of the CGST Rules, 2017, GST registration may be suspended in some cases while cancellation proceedings are still ongoing.

If a person decides to cancel their registration, the registration is treated as suspended from either:

• The date of the submission of the application for cancellation; or
• The date from which cancellation is being sought.

If the relevant officer takes action to cancel a GST registration, suspension of the GST registration may take place during the cancellation proceedings as well.

GST Registration Status After Cancellation Application

After filing the cancellation application, taxpayers can track their GST registration status through the GST portal using the ARN generated at the time of submission.

The application status helps taxpayers know whether the request is:

• Submitted and pending for processing.
• Pending clarification.
• Approved.
• Rejected.

If the proper officer requires additional information or clarification, the taxpayer must submit a response within the prescribed period.

GST Return Filing Before Cancellation

Cancellation of GST registration does not exempt a taxpayer from fulfilling obligations that have already become due under the GST law.

Before cancellation is completed, the registered person should ensure compliance with applicable GST return filing requirements and payment of outstanding liabilities.

Where cancellation has occurred due to non-filing of returns, the taxpayer must complete pending return filing requirements before applying for revocation of cancellation.

The taxpayer may need to:

• File pending GST returns.
• Pay outstanding tax liabilities.
• Pay applicable interest.
• Pay penalty or late fees, wherever applicable.

Cancellation Order Under GST

Upon consideration of the application, the relevant officer could approve the cancellation request if the requirements stipulated in the CGST Act and Rules are fulfilled.

The cancellation order is issued in FORM GST REG-19.

This order contains information like:

• Date when cancellation becomes effective.
• Grounds for cancellation.
• Other directions issued under GST provisions.

 It should be noted that cancellation of registration does not change the liability for the period prior to cancellation. All dues under the GST laws remain recoverable.

GST Revocation Of Cancelled Registration

The provisions of GST revocation are contained in Section 30 of the CGST Act, 2017, and Rule 23 of the CGST Rules, 2017.

Revocation is available only when the GST registration has been cancelled by the proper officer on their own motion. A taxpayer who voluntarily cancelled their GST registration cannot apply for revocation of such cancellation.

Conditions For GST Revocation

Before applying for revocation, the taxpayer must comply with the requirements prescribed under the GST Rules.

Where cancellation occurred due to non-filing of returns, the registered person must:

• Furnish all pending GST returns.
• Pay tax payable according to such returns.
• Pay applicable interest.
• Pay penalty and late fee, wherever applicable.

Only after completing these requirements can the taxpayer apply for restoration of the cancelled GST registration.

GST Revocation Process

The submission of an application for cancellation revocation occurs online through GST REG-21 on the GST portal.

The procedure essentially includes: –

• Getting access to the GST portal
• Filling Form GST REG-21
• Entering the necessary details
• Filing the application online
• Waiting for approval from the proper officer.

 If satisfied, the proper officer can revoke the cancellation by passing an order in Form GST REG22.

Rejection Of GST Revocation Application

If the proper officer proposes to reject the revocation application, a notice is issued in FORM GST REG23.

The applicant is given an opportunity to submit a reply in FORM GST REG24.

After considering the taxpayer’s response, the proper officer may approve or reject the application according to the provisions of the CGST Rules.

Conclusion

Cancellation of GST registration is handled in accordance with Section 29 of the CGST Act, 2017, plus the applicable provisions of the CGST Rules. Taxpayers may apply for cancellation using the GST portal when they stop doing business, transfer their business, or stop needing GST registration.

If the cancellation is initiated by the proper authorities, the law allows taxpayers to make their defence before the final order is issued. Section 30 of the CGST Act offers an opportunity to taxpayers for GST revocation if they meet specific conditions to recover their GST registration.

TMWala assists businesses, startups and proprietors with end-to-end support for GST registration cancellation and revocation.

FAQS

1. What is GST registration cancellation?
   GST registration cancellation ends the validity of a taxpayer’s GST registration.
2. Who can apply for GST cancellation?
   A registered taxpayer, legal heir, or proper officer can initiate cancellation.
3. Which form is used for GST cancellation?
   GST cancellation application is filed in FORM GST REG16.
4. Can GST registration be cancelled online?
   Yes, cancellation can be applied through the GST portal.
5. What happens to GSTIN after cancellation?
   The GSTIN becomes inactive after effective cancellation.
6. Is GST return filing required before cancellation?
   Yes, pending GST compliance obligations must be completed.
7. What is GST revocation?
   GST revocation restores a cancelled GST registration.
8. Which form is used for GST revocation?
   An application for revocation is filed in FORM GST REG21.
9. Can voluntary GST cancellation be revoked?
   No, revocation applies only to officer-initiated cancellation.
10. Which law governs GST cancellation?
    GST cancellation is governed by Section 29 of the CGST Act, 2017.