Export of Service

 Export of Service


Export of Services:

• Section 16 of the IGST Act places export of goods and services on the same footing; Export of services shall be treated as zero rated supply.

• The supplier can either export services after paying IGST and claim refund or can export services without payment of IGST under bond or under letter of undertaking.

“Export of Services” as defined under Section 2 (6) of IGST Act, 2017 means the supply of any service, when –

• the supplier of service is located in India;

• the recipient of service is located outside India;

• the place of supply of service is outside India;

• the payment for such service has been received by the supplier of service in convertible foreign exchange; and

• the supplier of service and the recipient of service are not merely establishments of a distinct person.

Anomaly in definition of export of services: Two conditions have been imposed in the definition of export of services which shall create unnecessary hardship to the service exporters.

1. The receipt of payment in convertible foreign exchange. No such conditions are there in case of export of goods.

2. It says that supplier of service and recipient of service must not be merely distinct persons. It is like saying that if a development centre of TCS in India is supplying services to TCS in some foreign countries, it shall not be treated as export. No such condition is there in case of goods. If Suzuki export goods to Suzuki outside India, it is very well an export.

Place of Supply for Export of services

• The default rule for place of supply (export of service) is the location of the service recipient if the address of the recipient is available.

• exporters must ensure that the address of service recipient can be presented before the authorities on request.

• Information Technology software, software development, BPO operations, software consultancy, etc. has been declared as service, Place of supply of software shall always be the location of the recipient.

• Apart from these, this rule will also apply to other services like software support/ maintenance and intermediary services as there are no exceptions under GST.


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