What is Intermediary Services?
Under GST, an intermediary is a broker, agent or similar person who arranges or facilitates a supply of goods or services between two or more other parties. The definition, in Section 2(13) of the IGST Act, specifically excludes a person who supplies goods or services on their own account. In plain terms: if you introduce, negotiate or coordinate a deal between a foreign party and someone else, and earn a commission or fee for that, you may be an intermediary. If you do the work yourself and bill for it, you generally are not.
Why it matters for exporters
For intermediary services, the place of supply is generally the location of the supplier, under Section 13(8)(b) of the IGST Act. That means an Indian intermediary's place of supply is in India, so one of the five conditions for an export of services fails. The result: GST is payable as on a domestic supply, even though the client is abroad and pays in foreign currency, and an LUT does not apply.
This is a frequent issue for sourcing agents, sales representatives for foreign companies, some back-office models and certain group support arrangements. Whether your contract makes you an intermediary depends on the facts, and it has been contested in many cases, so get your CA's view before invoicing. See why some exports don't qualify. The FEMA side, including the EDF, is separate from this GST question.
Example
Indus Sourcing LLP finds Indian textile suppliers for a Spanish retailer and earns 4 percent commission, about ₹3,20,000 a month. Its CA treats this as an intermediary service with the place of supply in India and advises charging GST. Separately, the firm asks its AD bank how to report the foreign receipts on its EDF.
Common confusion
Intermediary services are not the same as merchanting trade, where you buy and sell goods abroad yourself. Doing work on your own account for a foreign client, such as software development, is generally not intermediation.