GST Liability In Case Of Intermediary Services To Foreign Company for which payment received in foreign currency?
Query (Issue) Started By: – Shyam Agarwal Dated:- 11-12-2018 Last Reply Date:- 14-12-2018 Goods and Services Tax – GST
Got 12 Replies
GST
Sir, Mr.A providing Intermediary services to foreign company received an Advance on 02.09.18 for (50% advance) 500$ at ₹ 71\/- & paid GST on ₹ 35,500\/- Now Mr.A completed a provision on 31.10.18 & also raised invoice on 31.10.18 for 1000$ (for full value) & Rate of $ on 31.10.18 were ₹ 74\/-.Now as on 31.10.18,whether Mr.A is liable for GST on ₹ 37,000\/-(i.e on 500$ x ₹ 74\/-) or on ₹ 38,500 (i.e.on difference between 1000$xRs.74\/- Less: ₹ 35,500\/-value taken at the time of Advance?
\nReply By KASTURI SETHI:
\nThe Reply:
\nOn ₹ 37500\/- tax is to be paid and not on ₹ 38,500\/- as per Section 12 (2) of CGST Act.
\nReply By Ganeshan Kalyani:
\nThe Reply:
\n12(2) The time of supply of goo<\/p>\n
= = = = = = = =<\/p>\n
Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n )(a) i.e. the date of issue of the invoice read with Rule 34(2) of CGST Rules, 2017. Rate of exchange for determination of taxable value will be the time of supply of services. (Date that is 31.10.2018) Receipt of advance is subject to supply of services. Service has been supplied on 31.10.18. Here you cannot adopt hybrid procedure. So correct rate exchange for payment of tax is ₹ 74\/- for whole amount and not part amount (50%). Moreover, what is crucial is the invoice has been issued within 30 days of the supply\/completion of service.Rule 34(2) of CGST Rules clears the doubt to the effect that hybrid procedure cannot be adopted. Lacunae or doubt, if any, is also dispelled by way of Rule 34(2) of CGST Rules. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n ice it is for supply of service. Advance is provisional until service supplied. Section prevails over rule. Here Rule as well as Section emphasize on the time of supply i.e. date of invoice if issued with in prescribed period. Rule and Section are not contradictory. You cannot take benefit of the wordings, " whichever is earlier". When I posted my first reply I did not go through Rule 34. Rules are framed to clarify Act. When Rule says the date of supply is determinant factor for taxable value, the date 31.10.18 is decisive factor. Rest you may seek opinion of other experts. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n ayment" also. The whole sequence of events are finalized on the date of issue of invoice. You may call it "Advance" or Security but not 'payment'. Advance or security is to be adjusted or refunded subject to the terms and conditions executed between service provider and service receiver.Amount received on 2.9.18 does not conform to the legal definition of '"PAYMENT". Since the invoice has been issued on 31.10.18, there is no room for 'but' and 'if'. Now past cannot be undone. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n apply. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n","protected":false},"excerpt":{"rendered":" GST Liability In Case Of Intermediary Services To Foreign Company for which payment received in foreign currency? Query (Issue) Started By: – Shyam Agarwal Dated:- 11-12-2018 Last Reply Date:- 14-12-2018 Goods and Services Tax – GSTGot 12 RepliesGSTSir, Mr.A providing Intermediary services to foreign company received an Advance on 02.09.18 for (50% advance) 500$ at … Continue reading “GST Liability In Case Of Intermediary Services To Foreign Company for which payment received in foreign currency?”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-15468","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts\/15468","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=15468"}],"version-history":[{"count":0,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts\/15468\/revisions"}],"wp:attachment":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=15468"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=15468"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=15468"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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\nIn a nutshell, you are absolutely right. Tax is to be paid on 38500\/- as sought for.
\nReply By Shyam Agarwal:
\nThe Reply:
\nThanks Kasturi Sir, you are really always source of inspiration for all of us. Please clear one thing in Rule 34 of CGST rules which states that the rate<\/p>\n
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\nReply By Shyam Agarwal:
\nThe Reply:
\nSir, thanks for clarify my doubt in interpretation of Rule 34 read with Section 13. Please consider one more situation, suppose in above case, if supplier does not issue invoice within the time limit prescribed under section 31(2) of CGST act i.e. If Invoice is issued after completion of 30 days from the date of completion of service. Then still the answer will be same<\/p>\n
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\nHypothetical situation
\nHad you received full payment in advance on 2.9.18, you would have to go by the date of invoice for determination of rate of exchange for correct payment GST. Sometime supply is continuous for a number of years e.g. construction service, there the issue of 'whichever earlier' in connection with the date of receipt of payment arises.
\nHence I stick to my second reply posted after going through Rule 34 (2) in your specific query.\n<\/p>\n
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\nRule 34 emphasizes on "date of supply" of service. Supposing that invoice has not been issued within prescribed period we are to resort to Section 13(2)(b). What (b) emphasizes that is the date of provision of service. "provision' does not always stand for 'clause' . Here provision means to provide service i.e. the date of providing service. It is relevant to mention that there is no no difference between "Supply of service " and "Providing of Service". You are talking of completion of service and I am emphasizing on "Supply". Service can be supplied\/provided in piecemeal also in case of continuous supply of service e.g. Construction Service. This situation is not applicable to your case because " intermediary services" do not conform to the term,"Continuous supply" . The date of provision of service does not mean the date of completion of service. The word, "Completion" is neither present i<\/p>\n
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