India’s Nasscom has called on the finance ministry to reform GST regulations for cross-border transactions, aiming to reduce tax burdens on export-oriented technology companies and align rules with modern delivery models.
Nasscom has asked India’s finance ministry to overhaul the way the goods and services tax applies to cross-border work moved between a company’s head office and overseas branches, arguing that the present rules impose avoidable tax costs on export-oriented technology firms. In a submission seen by The Hindu BusinessLine, the industry body said the framework needs to be adjusted to better reflect how global delivery models now operate, with work often split between teams in India and branches abroad.
At the centre of Nasscom’s case is the treatment of internal transactions within the same legal entity. Under the current GST regime, those flows can be treated as taxable even when they are part of a contract ultimately delivered to a customer outside India. Nasscom says that can leave domestic tax embedded in services linked to foreign projects, tying up working capital and increasing the chance of disputes. The Economic Times has separately reported that the association wants the definition of export of services changed so that intra-entity supplies are not pulled into tax for these export-linked arrangements.
The group has proposed two broad routes for reform. One would delete the newer export definition that excludes services between establishments, restoring zero-rating for branch-delivered exports and bringing branch structures closer to subsidiary models. The other would create a specific carve-out under Schedule I of the GST law so that internal head office-branch supplies tied to export delivery are not treated as taxable at all. Nasscom has also called for a single consolidated circular to reconcile earlier guidance and make the rules clearer for businesses and tax officers.
Ashish Aggarwal, vice-president and head of public policy at Nasscom, said the issue also affects research and development, engineering and testing work. He argued that when an Indian team works on a prototype or sample for an overseas customer, the service should qualify as an export if the customer receives and uses the result abroad. He added that clearer rules are increasingly important as artificial intelligence and other technologies broaden the range of services being delivered from India, including work done for global capability centres.
The association’s latest submission builds on concerns it raised in October 2025 about the GST asymmetry affecting global delivery models, input tax credits and export competitiveness. Nasscom has also previously criticised a tax notice issued to Infosys, saying it reflected a misunderstanding of the industry’s operating structure, in which Indian head offices and foreign branches are part of the same legal entity. Its broader message is that the current regime was designed for a simpler business environment and now needs to be aligned with how technology services are actually sold and delivered.
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