This circular provides clarification regarding the place of supply of data hosting services supplied by service providers located in India to cloud computing service providers situated outside India.

It clarifies that such data hosting services are not intermediary services, as the hosting provider operates on a principal-to-principal basis, without facilitating supply between the cloud provider and its end users. The hosting provider independently manages data centres, infrastructure, and network operations.

Further, these services are not related to goods “made available” by the client under Section 13(3)(a) of the IGST Act, nor are they directly connected to immovable property under Section 13(4). Hence, their place of supply is determined under Section 13(2) of the IGST Act — i.e., the location of the recipient.

Accordingly, where the recipient (cloud service provider) is located outside India, the place of supply will be considered outside India, and such services will qualify as “export of services”, provided all other conditions under Section 2(6) of the IGST Act are fulfilled.