Goods and Services Tax – Started By: – Shyam Agarwal – Dated:- 26-12-2018 Last Replied Date:- 1-1-2019 – Sir, IT & ITES Industries operates its business having head office in India and having branches outside india. Now In order to providing services to its foreign clients, part of service provision is done from India and rest part is completed by its foreign branches but Invoice to all foreign clients is done from india (from head office).whether it be export of service a OR Not to be export by contending that part of service is performed from outside india i.e.by foreign branch? – Reply By Mahadev R – The Reply = One of the condition for export of service is that the supplier of service is located in India. In this case, to the extent service provided by foreign branch could be considered as non-export. However, here we need to understand if this foreign branch is providing service to foreign customer or head office in India. As the agreement with final customer would be with he
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d foreign branch outside india is clear. However the concerned query is about services provided collectively by foreign branch and Indian head office to the Foreign customer (who are not related persons) whether the same should be qualified as an Export because one may contend that as per one of condition for export is that supplier should be in India and in the said situation location of supplier is technically in India as well as outside india though Agreement with foreign customers are executed by Indian head office, Invoices are issued by Indian head office as well as payment in foreign currency is also received by Indian head office. Further, as per information from some sources it was discussed in 31st GST Council meeting, the same issue was discussed and official said that as long as transaction is permitted by RBI the same should be considered as a an Export. Is it correct? Please suggest. – Reply By Mahadev R – The Reply = Sir, As mentioned in my earlier mail, though partial s
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e and payment in foreign currency is also received by Indian head office. Please elaborate your suggestions as your guidance is always useful for me. – Reply By KASTURI SETHI – The Reply = What does ITES stand for ? – Reply By Shyam Agarwal – The Reply = Sir, ITES stands for Information Technology Enabled Services. – Reply By KASTURI SETHI – The Reply = Dear Sh.Agarwal Ji, With reference to second part of the query, it is not taxable. It cannot be termed as export of service.This service is being provided from non-taxable territory(jurisdiction) to non taxable territory(jurisdiction) by foreign branch, a distinct person as intermediary. Place of supply is covered under Section 13 (8) (b) of IGST Act, 2017. Also read the following:- Extract of FAQ for GST on IT/ITES dated 18.8.2017 Question 11 : I am an Indian Company who makes software and sells it outside the country. I have hired a firm (not a related party) C located abroad to facilitate the supply of software in Europe and the
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upply is made from more than one establishment, whether the place of business or fixed establishment, the location of the establishment most directly concerned with the provision of the supply; and (4) in absence of such places, the location of the usual place of residence of the supplier. The location of C is to be determined by applying the criterion from (2), or (3), or as the case may be, (4). I am of the view that Notification No.15/18-IT-(Rate) dated 26.7.18 is not applicable for the purpose of exemption from IGST. – Reply By Mahadev R – The Reply = More clarification on this in today's circular no.78 – Reply By KASTURI SETHI – The Reply = In the situation explained by the querist, today's circular cannot be applied here. The present situation is not import of service. Hence no RCM. – Reply By Shyam Agarwal – The Reply = Respected both of Experts, As Mahadev Sir has rightly said. As Circular No.78/50/2018 issued by CBIC on dated 31.12.2018 in which department has clarifie
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