Goods and Services Tax – General FAQ on GST – Frequently Asked Questions – 170818-01 – Question 1 : Whether software is regarded as goods or services in GST? Answer : In terms of Schedule II of the CGST Act, 2017, development, design, programming, customisation, adaptation, upgradation, enhancement, implementation of information technology software and temporary transfer or permitting the use or enjoyment of any intellectual property right are treated as services. But, if a pre-developed or pre-designed software is supplied in any medium/storage (commonly bought off-the-shelf) or made available through the use of encryption keys, the same is treated as a supply of goods classifiable under heading 8523. Question 2 : What are the implications of recognising the development, design, programming, customisation, adaptation, upgradation, enhancement, and implementation of information technology software as a service? Answer : The primary implication is that the place of
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then integrates and supply as a package to clients. These individuals are having small turnover of ₹ 5 to 10 lakh, and therefore are not registered in GST. Whether there is any liability on B in respect of services provided by such individuals? Answer : If the supplies are made by unregistered suppliers, GST is liable to be paid by the recipient, who is a registered person, under section 9(4) of the CGST Act, 2017. Therefore, in this case B is liable to pay GST on services provided by these individuals. B can claim credit of this tax paid by him on reverse charge. Question 5 : What is the rate of tax on IT services? Answer : The rate of GST on IT services is 18%. Question 6 : Whether exports of software services attract GST? Answer : Exports and supplies to SEZ units and SEZ developers are zero-rated in GST. Zero-rating effectively means that no tax is payable on exports but the exporter/supplier is entitled to the input tax credit on inputs/input service
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planation 1 of section 8 of the IGST Act, 2017. Question 8 : How do I determine the place of supply of IT/ITES services? Answer : Place of supply of IT/ITES services is the location of the recipient in terms of section 12 and 13 of the IGST Act, 2017. However, if the recipient is not registered and his address is not available on the records of the supplier, the place of supply would be the location of the supplier. Question 9 : How to determine the location of the recipient? Answer : Location of the recipient of service is defined in section 2(14) of the IGST Act. A recipient of services is treated as located outside India if his place of business where he receives services is outside India or, if he does not have a place of business, his usual place of residence is outside India. Question 10 : Would I be liable to pay GST on reverse charge even if the foreign supplier of software from whom I buy for use in my firm registered under GST was to accept the paymen
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vice is location of the supplier in terms of section 13(8) of the IGST Act, 2017. As C is located outside India, GST is not payable in this case. Question 12 : What factors determine the location of C (in question 11) as being outside India? Answer : In terms of section 2(15) of the IGST Act, 2017, the location of a service provider is to be determined by applying the following steps sequentially : (1) where a supply is made from a place of business for which the registration has been obtained, the location of such place of business; (2) where a supply is made from a place other than the place of business for which registration has been obtained (a fixed establishment elsewhere), the location of such fixed establishment; (3) where a supply 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 t
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units within a State, whether located in one SEZ or more than one SEZ. (2) A person having unit(s) in a Special Economic Zone as well as outside the SEZ in a State shall make a separate application for registration for SEZ unit(s) as a business vertical distinct from his other units located outside the Special Economic Zone in that State (Refer Rule 8(1) of CGST Rules, 2017). Question 15 : I have a unit in the DTA and another in the SEZ; can I take a common registration? Answer : No. A person having unit(s) in a Special Economic Zone as well as outside the SEZ in a State, shall make a separate application for registration for SEZ unit(s) as a business vertical distinct from his other units located outside the Special Economic Zone in that State (Refer Rule 8(1) of CGST Rules, 2017). Question 16 : If I supply a laptop bag along with the laptop to my customer, what would be the rate of tax leviable? Answer : If the laptop bag is supplied along with the laptop in the o
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governing the usage. The agreement is renewable and/or could be amended from time to time. To find out as to whether there is an element of supply involved when software is delivered to its customer, the terms and conditions of EULA are material. The contract for supply therefore assumes significance in this test to decide whether or not there has been temporary transfer or permitting the use or enjoyment of any intellectual property right . Question 19 : What special provisions are attracted in GST with regard to associated enterprises? Answer : An enterprise which participates, either directly or indirectly, through one or more intermediaries, in the management, or control or capital of the other enterprise is an associated enterprise. In the context of GST, associated enterprise is particularly relevant in the case of supply of services, where the supplier is located outside India. In such cases, the time of supply will be the earlier of date of entry in the books of acco
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who bills the OEM for the services he provides to the customer. What is the tax liability of D ? Answer : D is providing service to the OEM. GST is payable on the value of any supplies made by D to OEM i.e. in respect of bills raised by D on the OEM. Question 22 : How will the defective parts be sent to the mother warehouse/repairing centre for repair by the downstream repairing centres? What is the tax liability? Answer : The defective parts shall be sent for repair on a delivery challan accompanied by such e-way bill as may be prescribed. GST shall be chargeable on the repair amount, including the cost of parts, charged by the repairing centre. Question 23 : What is the tax liability in a scenario where supplies are made from multiple locations (in different States) of the supplier to the recipient under a single contract? Answer : Delivering services from various locations and integrated pricing for the contract as a whole is the norm in IT/ITES industry. N
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Answer : The second proviso to rule 28 of the CGST Rules, 2017 provides that where the recipient is eligible for full input tax credit, the value declared in the invoice shall be deemed to be the open market value of goods and services. Question 25 : Can payment of IGST on reverse charge basis on import of goods/services be done through book entry or ITC? Answer : No. GST payable on reverse charge basis is to be discharged through cash only. Rule 85(4) of the CGST Rules, 2017 refers. Question 26 : Is the requirement of transferring of credit through ISD mechanism mandatory? Answer : The ISD provision under the CGST Act, 2017 is not mandatory. It only provides the manner of distribution of ITC wherever the business entity wishes to distribute the ITC as an Input Service Distributor. Question 27 : What is the format for invoices to be issued in the case of reverse charge payment of GST? Answer : No separate format for any type of invoicing including s
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