GST India Forum – Goods and Services Tax (GST) in India › Forums › Discussion › GST on export of service-back office operations Read more at: http://www.caclub
- VENKAT VENKATARAGHAVANParticipantJuly 28, 2017 at 4:07 PMPost count: 5Topics: 1
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A private company registered in India has 2 out of 4 directors who are directors of a US Company. The Indian company provides back office support to the US company (and the only client). The service is in the category “online information and database access or retrieval services” and according to Sec 13(12) of IGST Act, the place of supply of such service shall be the location of the recipient of service. The value of service is on Cost plus basis and the consideration is received in convertible foreign exchange. Operations pass the test for “Export of Service” completely. Are they liable for IGST just because the export of service is to “related parties”?
My view is, IGST is not applicable as, the service per se is outside the gambit (qualifying as zero rated supply) and hence, as the first test is satisfied, valuation rules do not apply at all. So no need to proceed with further tests of applicability.
Any contrary view pleaseRamasamy UlaganathanParticipantJuly 29, 2017 at 12:36 PMPost count: 17Topics: 0
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Here is my view:
In the given scanaria, there is no doubt that transaction qualify as export of service and very well fall within the Zero rated supply category. Hence, Valuation rule related to related party transaction does not have any impact at all. However, Company has to ensure that all conditions to avail zero rated benefit fullfilled otherwise still there is chance of IGST applicability. Example. if export relaization against any of the export service invoice not realized within one year from the date of invoice or further period as may be allowed by commissioner, IGST would trigger along with interest. (Ref : Notificaiton 15/2017 )
When IGST triger the valuation rule related to related party also will automatically trigger.VENKAT VENKATARAGHAVANParticipantJuly 29, 2017 at 12:50 PMPost count: 5Topics: 1
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Of course, the moment it doesn’t satisfy the criteria of Export of Service (Zero Rated), then valuation rules will kick in. Thanks, Ram.
An additional point is it is mandatory to file LUT or bond for export of services as well if you want to export without charging IGST on the same. In case you do not file the LUT or bond, then you need to charge GST and then claim the refund later on.
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