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Major TDS Changes under New Income Tax Act 2025

A MAJOR change in India's GST laws regarding intermediary services (like brokers or commission agents) introduced by the Finance Act, 2026.

In simple terms, here is what this update means:
1. What was the old rule?
Previously, if an Indian supplier provided "intermediary" services to a client outside India, the law used a "legal fiction" to say the service happened in India (the supplier's location).

The Result: Even though the client was foreign, the Indian company had to pay 18% GST and could not treat it as an "export". This led to many years of legal fights and made Indian services more expensive globally.

2. What is the UPDATE?
The government has Deleted the old rule (Section 13(8)(b) of the IGST Act). Now, these services follow the general rule where the "place of supply" is the location of the recipient (the foreign client).

The Result: These services are now officially treated as Exports of Services.

3. Key Benefits for Indian Businesses
Zero GST: If you serve foreign clients, you no longer have to charge or pay 18% GST (if you fulfill export conditions like receiving payment in foreign currency).
Easier Refunds: Businesses can now apply for a Letter of Undertaking (LUT) to export without paying tax upfront and can claim refunds on the GST they paid for business expenses (like rent or software).
More Competitive: Removing the 18% tax burden makes Indian service providers more price-competitive in the international market.

4. Important Note for Importers
While this is great for exporters, it adds a step for Indian companies buying services from overseas. They may now be liable to pay GST themselves under the Reverse Charge Mechanism (RCM).

**This reform took effect starting April 1, 2026, following the enactment of the Finance Act.

IMPORTANT UPDATE:
Which ITR form will be used for AY26-27(FY25-26)

Income tax Act,1961 retired on 31st March, 2026 after 65 years of serving Nation.Here onwards responsibilities for Viksit Bharat is on Income Tax Act 2025...
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