Gst On Export Of Service

Rahul Rai
watch_later 3 years, 5 months ago

What are the provisions applicable to export of services to a foreigner.

For example, if a software consultancy firms provides services to a foreign client, whether service tax should be charged on it or not?

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1 Answer

Pulkit Sharma watch_later 3 years, 5 months ago

Under GST exports are treated as Inter-state supplies and tax is to be charged on all supplies whether supplied goods or services or both.

However if we go to IGST act where zero rated supplies are specified tax is not to be charged.

A supply of service will be treated as zero rated export if:

  1. the supplier of service is located in India;
  2. the recipient of service is located outside India;
  3. the place of supply of service is outside India;
  4. the payment for such service has been received by the supplier of service in convertible foreign exchange; and
  5. the supplier of service and the recipient of service are not merely establishments of a distinct person in accordance with Explanation 1 in section 8;

So if you satisfy above conditions then tax is not be charged on export of services otherwise tax is to be charged.

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    Conditions are bit complex. Why government wants remittance in foreign currency. If we recieve money in Indian currency it will be good for INR. The value will appreciate. Any comment - Rahul Rai
    So under the above conditions the software supplier STILL need to register for GST ? Please confirm. And if yes then the supplier, in the invoice, simply needs to mention the amount chargeable for the service and show no other item in that invoice ? - Gurbir Singh
    Right. Create and invoice with no GST. In invoice you have to mention, Supply for Export or Export invoice. Exact wordings are given in rules. - Pulkit Sharma
    Thanks Pulkit for the clarification....... but there are opinions which say IGST needs to be charged and mentioned in the invoice and then squared off against reverse credit...but I believe this is not applicable for export of services....correct? - Gurbir Singh
    Also I believe I can get a credit for all taxes charged on invoices I receive against my business expenses? Is this correct and how would this work out? Can you please help clarify this issue too? And would this only applicable to India delivered services and not export services? - Gurbir Singh
    I have to go through complete rules. But yes credit is available against all expenses. Which can be claimed as refund. - Pulkit Sharma
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