India has clarified how overseas clients’ payments to Indian stockbrokers can meet one export-of-services test for goods and services tax (GST), potentially making eligible brokerage fees zero-rated while leaving other legal conditions intact.
In Circular No. 263/09/2026-GST, issued Oct. 26, the Central Board of Indirect Taxes and Customs (CBIC) said the payment criterion may be met when fees reach brokers through Special Non-Resident Rupee (SNRR) or Non-Resident External (NRE) accounts. If a client pays through a Non-Resident Ordinary (NRO) account, the funds must pass through a repatriable SNRR or NRE account to meet that criterion.
The Integrated Goods and Services Tax (IGST) Act sets five conditions for export-of-services status. Among them, the provider must be in India, the recipient outside India and the place of supply outside India. Only services that satisfy all the requirements receive zero-rated treatment; brokerage that does not qualify remains subject to 18% GST.
A separate 2026 amendment removed the IGST Act provision that had assigned the place of supply for intermediary services to the supplier’s location. Under the law’s general cross-border rule, the recipient’s location applies when no other exception governs.
Reuters reported that the clarification came amid heavy foreign selling of Indian stocks. Earlier EconoTimes coverage of foreign investor outflows cited them among pressures on India’s market recovery. Jefferies said higher trading volumes could benefit brokerage firms and depositories, Reuters reported. Ambareesh Baliga, an independent market analyst in Mumbai, told Reuters the move was “sentimentally positive” but might do little to improve foreign portfolio investor sentiment.
The Indian Express separately reported that officials were weighing a reduction in the current 12.5% long-term capital gains tax rate before the 2027-28 federal budget. The report described discussions, not a government decision.
