In terms of Interim Administrative measures, Nasscom recommended the government issue one consolidated circular that merges previous circulars and clarifies their application to cross-border HO–BO cases | Photo Credit: REUTERS

Technology Industry representative body of India Nasscom pushed for a structural rationalisation of the existing GST framework for cross-border Head Office–Branch Office (HO–BO) transactions to the Finance Ministry in a recent submission.

Nasscom has proposed a co-ordinated reform package that will enable export treatment of relevant cross-border ‘home office-branch office’ (HO–BO) services. While the two offices are part of the same legal entity, the existing GST framework creates different tax consequences depending on how the global delivery model is structured. Nowadays Indian technology and services companies increasingly deliver global contracts through its overseas branch for onsite delivery, client engagement while local teams undertake the offshore component.

This means domestic GST can remain embedded in services supporting overseas operations, creating additional costs, blocking working capital and contributing to disputes under the current framework.

Creating Parity

To this end, NASSCOM asked to delete the new definition of ‘export’ that excludes services between establishments. This restores zero-rating for branch-delivered exports, creates parity between branch and subsidiary models and between goods and services and reduces litigation and embedded tax cost. Alternatively, the government can carve out cross-border intra-entity services so that internal head-office–branch supplies are not treated as taxable.

In terms of Interim Administrative measures, Nasscom recommended the government issue one consolidated circular that merges previous circulars and clarifies their application to cross-border HO–BO cases.

“State that valuation of branch support may be Nil where the contract is with a customer outside India and foreign exchange is realised in accordance with FEMA,” said NASSCOM in its submission viewed by businessline.

Further, it advised instructions confirming that refund eligibility depend on FEMA compliant export proceeds, not on internal branch invoicing and apply the same principle to inbound services to maintain tax neutrality.

“This ensures compliant exporters are not denied relief due to differing field interpretations,” said Nasscom.

GST Asymmetry

In October 2025, Nasscom had flagged the GST asymmetry in global delivery models and its impact on input tax credits, working capital and export competitiveness. Taking this forward, the latest submission proposes a coordinated set of legislative and administrative changes to provide a more durable solution.

Further, when an Indian team carries out R&D, engineering or testing on a prototype or sample that an overseas customer provides in India, the current rules deny it export treatment, as per Ashish Aggarwal, Vice President and Head of Public Policy, Nasscom.

He argued that the service should qualify as an export since the customer receives and uses the result abroad. India has large potential in technology-enabled services, R&D and engineering, including the mandates GCCs carry out here for their global organisations. As AI and other technologies widen the range of services delivered from India, clarity on this point now would help prevent future disputes, he said.

Published on October 6, 2026