Advertising services to foreign clients: export or intermediary?
An Indian agency, a foreign brand, Indian media and Indian viewers. Four facts that make one of the hardest export questions in the Act.
Where an Indian advertising agency provides services to a foreign client on a principal to principal basis, buying media in its own name and charging the client for the campaign, the supply is capable of being an export of services. Where the agency merely arranges or facilitates the purchase of media by the foreign client from Indian media owners for a commission, it is an intermediary and the place of supply is in India. Circular 230/24/2024-GST addressed advertising services provided by Indian agencies to foreign entities and the related characterisation questions.
The two models
Principal to principal: the agency contracts with the foreign client for the campaign, contracts with Indian media owners in its own name, bears the risk, and charges the client a consolidated amount. This is a supply on the agency's own account and is not intermediation.
Agency or commission model: the foreign client contracts with the media owner, and the Indian agency arranges the placement for a commission. This is intermediation and the place of supply is the agency's location.
The characterisation follows the contracts and the invoicing. Where the media invoice is in the agency's name and the agency is liable to pay it irrespective of the client's payment, the principal to principal analysis is strong.
Circular 230/24/2024-GST clarified that in the principal to principal model the Indian agency is not an intermediary, and addressed the argument that the recipient is in India because the advertisement is seen in India, holding that the recipient is the foreign client that contracted and pays.
The recipient argument, and the answer to it
The department has argued that because the advertisement targets Indian consumers, the service is consumed in India and the place of supply is in India.
The answer is that the recipient of the service is the person liable to pay the consideration, which is the foreign client. The Indian audience is the object of the campaign, not the recipient of the service.
The circular supports this reading, and it should be cited directly in any reply.
The distinct person question also arises where the foreign client has an Indian subsidiary that benefits. The contract must identify the contracting establishment.
Documenting the position
The agency agreement with the foreign client, describing a campaign service rendered to the client for a consolidated consideration.
Media contracts and invoices in the agency's own name, with the agency's payment obligation independent of the client's payment.
Remittance certificates indexed to invoices.
A note recording that the agency is not an intermediary, with reference to the circular and the contract terms.
Authorities relied on
Clarified that an Indian advertising agency dealing with a foreign client on a principal to principal basis is not an intermediary, and that the recipient of the service is the foreign client rather than the Indian audience.
What to do on Monday
Contract with foreign clients on a principal to principal basis where the commercial model permits.
Take media contracts and invoices in your own name, with an independent payment obligation.
Cite Circular 230/24/2024-GST in every reply on this issue.
Identify the contracting establishment where the client has an Indian presence.
This page states the general position. A reader with a specific question on their own facts may write to the GST practice at AMLEGALS.
Write to the GST practiceQuestions we are asked on this
Does the advertisement being seen in India make the supply domestic?
No. The recipient is the person who contracted and pays, per the circular.
What if we buy media as an agent for the client?
Then the intermediary analysis applies and the place of supply is your location.
Does a pure agent structure help?
It changes the value but not the characterisation. If you are arranging the media purchase for the client, you are an intermediary.
What if the foreign client has an Indian subsidiary?
Identify the contracting establishment expressly. Where the Indian entity contracts, the supply is domestic.
Can we split the engagement?
Yes, and where part is genuinely a principal to principal service and part is agency, separate them contractually and treat each on its own footing.
In this cluster
- Place of supply under GST: the full decision tree
- Intermediary services: characterisation, exposure and structuring
- Export of services: the five conditions and where claims fail
- Dharmendra M. Jani: the constitutional attack on intermediary taxation, and where it stands
- Mohit Minerals: ocean freight, composite supply, and the sentence that changed GST federalism
- Import of services and reverse charge under Section 5(3) of the IGST Act
- OIDAR services: registration, compliance and the 2023 amendment
- Bill to ship to transactions and Section 10(1)(b)
- High seas sales, bonded warehouse transfers and Schedule III
- Merchant trade and out and out supplies
GST Insights is published by AMLEGALS for general information. Law stated as on 3 September 2026. Not advice on any particular set of facts; not an advertisement or a solicitation under Rule 36 of the Bar Council of India Rules. Readers with a question on their own facts may write to the GST practice of their own accord.