The Central Board of Indirect Taxes and Customs in a circular dated October 26 said that brokerage paid through repatriable rupee accounts, from which funds can be moved out of India, could count as an export of services and therefore be exempt from GST.
India levies 18% GST on brokerage fees. Full-service brokers typically charge brokerage between 0.01% and 0.55% on the value of shares traded.
The clarification could reduce the GST burden on foreign portfolio investors, and any increase in trading volumes would be positive for brokerage firms and depositories, Jefferies said in a note on Tuesday.
Foreign investors have offloaded Indian shares worth $32.66 billion so far this year, well above the previous annual record of $18.91 billion in 2025, according to National Securities Depository data.
India’s benchmark Nifty 50 index is down 13.6% in 2026, setting the stage for its worst annual performance in over a decade, while MSCI’s emerging markets index has risen 12.4%.
The GST clarification is “sentimentally positive but may not make much of a difference, especially for FPI mood…. However, a decision on capital gains (tax) could provide much needed relief,” said Ambareesh Baliga, an independent market analyst in Mumbai.
The move comes amid speculation about a potential cut in the capital gains tax. The Indian Express newspaper earlier this week reported that the government is discussing lowering long-term capital gains tax from 12.5% for both domestic and foreign investors in the run-up to the federal budget next year.