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Date: 30-09-2019
Notification No: Notification No. 04/2019- Integrated Tax
Issuing Authority: GST  
Type: Integrated Tax
File No: F. No.354/136/2019 -TRU
Subject: Seeks to notify the place of supply of R&D services related to pharmaceutical sector as per Section 13(13) of IGST Act, as recommended by GST Council in its 37th meeting held on 20.09.2019.

Government of India
Ministry of Finance
(Department of Revenue)

Notification No. 04/2019- Integrated Tax

New Delhi, the 30th September, 2019

G.S.R......(E).- In exercise of the powers conferred by sub-section (13) of section 13 of the Integrated Goods and Services Tax Act, 2017 (13 of 2017), the Central Government, on being satisfied that it is necessary in order to prevent double taxation or non-taxation of the supply of a service, or for the uniform application of rules, on the recommendations of the Council, hereby notifies following description of services or circumstances as specified in Column (2) of the Table A, in which the place of supply shall be the place of effective use and enjoyment of a service as specified in the corresponding entry in Column (3), namely:-

Table A
Sl. No. Description of services or
Place of Supply
(1) (2) (3)
1 Supply of research and development
services related to pharmaceutical
sector as specified in Column (2)
and (3) from Sl. No. 1 to 10 in the
Table B by a person located in
taxable territory to a person located
in the non-taxable territory.
The place of supply of services shall be the
location of the recipient of services subject to
fulfillment of the following conditions:-
(i) Supply of services from the taxable
territory are provided as per a contract
between the service provider located in
taxable territory and service recipient located
in non-taxable territory.
(ii) Such supply of services fulfills all other
conditions in the definition of export of
services, except sub- clause (iii) provided at
clause (6) of Section 2 of Integrated Goods
and Services Tax Act, 2017 (13 of 2017).

Table B
Sl. No. Nature of Supply General Description of Supply
(1) (2) (3)
1 Integrated discovery and
This process involves discovery and
development of molecules by
pharmaceutical sector for medicinal use. The
steps include designing of compound,
evaluation of the drug metabolism,
biological activity, manufacture of target
compounds, stability study and long-term
toxicology impact
2 Integrated development
3 Evaluation of the efficacy of new
chemical/ biological entities in
animal models of disease
This is in vivo research (i.e. within the
animal) and involves development of
customized animal model diseases and
administration of novel chemical in doses to
animals to evaluate the gene and protein
expression in response to disease. In
nutshell, this process tries to discover if a
novel chemical entity that can reduce or
modify the severity of diseases. The novel
chemical is supplied by the service recipient
located in non-taxable territory.
4 Evaluation of biological activity of
novel chemical/ biological entities
in in-vitro assays
This is in vitro research (i.e. outside the
animal). An assay is first developed and then
the novel chemical is supplied by the service
recipient located in non-taxable territory and
is evaluated in the assay under optimized
5 Drug metabolism and
pharmacokinetics of new chemical
This process involves investigation whether
a new compound synthesized by supplier
can be developed as new drug to treat
human diseases in respect of solubility,
stability in body fluids, stability in liver
tissue and its toxic effect on body tissues.
Promising compounds are further evaluated
in animal experiments using rat and mice.
6 Safety Assessment/ Toxicology Safety assessment involves evaluation of
new chemical entities in laboratory research
animal models to support filing of
investigational new drug and new drug
application. Toxicology team analyses the
potential toxicity of a drug to enable fast and
effective drug development.
7 Stability Studies Stability studies are conducted to support
formulation, development, safety and
efficacy of a new drug. It is also done to
ascertain the quality and shelf life of the
drug in their intended packaging
8 Bio-equivalence and Bioavailability Studies Bio-equivalence is a term in
pharmacokinetics used to assess the
expected in vivo biological equivalence of
two proprietary preparations of a drug. If
two products are said to be bioequivalent it
means that they would be expected to be, for
all intents and purposes, the same. Bioavailability is a measurement of the rate and
extent to which a therapeutically active
chemical is absorbed from a drug product
into the systemic circulation and becomes
available at the site of action.
9  Clinical trials The drugs that are developed for human
consumption would undergo human testing
to confirm its utility and safety before being
registered for marketing. The clinical trials
help in collection of information related to
drugs profile in human body such as
absorption, distribution, metabolism,
excretion and interaction. It allows choice of
safe dosage.
10 Bio analytical studies Bio analysis is a sub-discipline of analytical
chemistry covering the quantitative
measurement of drugs and their metabolites,
and biological molecules in unnatural
locations or concentrations and
macromolecules, proteins, DNA, large
molecule drugs and metabolites in biological

2. This notification shall come into force on the 1st day of October, 2019.

[F. No.354/136/2019 -TRU]

(Ruchi Bisht)
Under Secretary to the Government of India


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