GST on Overseas Services in India – Export of Services under GST

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May 27, 2019

GST on Overseas Services

If you are in the presumption that all the services provided from India to outside are free from GST, you should think again. It is not necessary that all types of services being provided from India to another country can be considered as export. Let’s discuss for implementation of GST on overseas services.

What are Export Services? Export of Services under GST Regime

As per the GST Act India, all export services will be zero-rated under GST (Goods & Services Tax).

So let see what characteristics (as per the rules of Authorities of West Bengal) tag the service as an export and make it GST free:

  1. The service provider must be located in India
  2. The service receiver must be located outside India
  3. The place of supply of service must be outside India
  4. The payment of the service must be received in foreign currency, (Currency other than INR) by the service provider
  5. The provider and receiver of service must also be unique to each other.

Only the services which fulfill the all above-mentioned conditions will be treated as export of services and be eligible for zero-rated GST.

Also Read: Impact of GST on Export Sector

GST on Overseas Services Besides Exports

If an overseas service does not fulfill the above conditions, then we will have to check whether service is provided as an Intermediary service or not. If it is an Intermediary service, the place of supply will be the place of the intermediary, which is in India.

Intermediaries are brokers, agents or any other person who acts as a link between people in order to facilitate the supply of goods or services or both, or securities, between them. These activities by the agents are not done for themselves but for other people (Principal).

To conclude if the service provider is an Intermediary or not, we should check:

  • The payments for the service is calculated on the basis of the coverage of the provider as in terms of Number of customers reached, the percentage of target attained, new leads generated, etc).
  • Consent from the service receiver should be granted to carry out the activities connected to the provision of the service.

Recommended: GST impact on IT Sector

If the services are wrapped up as intermediary then it will not be taken as an export even if the place of supply of service is outside India.

Intermediary generally charge commission against the services given by them. The commission income so earned is subjected to GST and all the provisions of GST law are applicable accordingly.

This is all about GST on overseas services in India. Hope this article will serve with clear cut knowledge about Export and Intermediary service and to evaluate if the GST is applicable on certain services or not.

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