CONSIDERATION RECEIVED IN INR FOR EXPORT OF SERVICE UNDER GST REGIME
By: – Shripada Hegde
Goods and Services Tax – GST
Dated:- 10-6-2017
One of the controversies or discrepancies attached with the Export of Service under the present taxation system for services is the receipt of consideration or payment in INR. This article tries to put light on the 'Status Quo' and the effect under GST Regime.
In the present taxation system for services, in order to consider a service as export of service, conditions under Rule 6A of Service Tax Rules, 1994 has to be satisfied. Before the incorporation of Rule 6A, export of services were governed by Export of Service Rules, 2005. One of the conditions is that the payment for the services
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Foreign Exchange as per Clause 3A.6(i) of Exchange Control Manual
* When a person receives in India, payment in rupees from the account of a bank situated in any country outside India maintained with an authorised dealer, the payment in rupees shall be deemed to have repatriated the realized foreign exchange to India as per para 4 of Notification No. FEMA 9/2000-RB, dated 3rd May 2000.
* From Notification No. FEMA 14/2000-RB, dated 3rd May 2000, it is clear that payment in rupees from account situated in any country (other than a member country of Asian Clearing Union or Nepal or Bhutan) is a manner of receipt of foreign exchange.
* Relying on the Judgement of the apex court in case of J.B. Boda and Company the authority has expresse
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Let's now move to understand the effect under GST. In GST the Government has given a definition for 'Export of Service' under Section 2(6) of IGST Act. The said sub-section is reproduced below.
“(6) “export of services” means the supply of any service when,
(i) the supplier of service is located in India;
(ii) the recipient of service is located outside India;
(iii) the place of supply of service is outside India;
(iv) the payment for such service has been received by the supplier of service in convertible foreign exchange; and
(v) 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″
It can be noted that the condition relate
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