IT services by Indian company to UK entity qualify as zero-rated export under IGST Act section 16(1)(a)

AAR Tamil Nadu ruled that IT services provided by an Indian company to its UK entity constitute export of services qualifying for zero-rated supply under IGST Act. The Authority determined both entities are distinct persons with different directors, meeting section 2(6) conditions for export of services. The online monitoring software contract work paid in UK currency qualifies as zero-rated supply under section 16(1)(a) of IGST Act, 2017, making it exempt from IGST levy.

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Issues Involved:
1. Taxability of services rendered by the Applicant.
2. Whether the services qualify as export of services under GST Act.
3. Applicability and rate of IGST for export services.

Summary:

1. Taxability of Services Rendered by the Applicant:
The Applicant, M/s. Luksha Consulting Private Limited, engaged in providing IT-enabled services, sought an Advance Ruling on whether their services to foreign clients qualify as export of services under GST provisions. The services include developing functionalities and dashboards based on SAP applications and consulting services for monitoring and fixing SAP objects.

2. Whether the Services Qualify as Export of Services under GST Act:
The Authority examined the conditions under Section 2(6) of the IGST Act, 2017, which defines "export of services." The conditions include:
- The supplier of service is located in India.
- The recipient of service is located outside India.
- The place of supply of service is outside India.
- Payment for such service is received in convertible foreign exchange.
- The supplier and recipient are not merely establishments of a distinct person.

The Authority found that the Applicant met all these conditions:
- The supplier, M/s. Luksha Consulting Private Limited, is located in India.
- The recipient, M/s. Luksha Limited, UK, is located outside India.
- The place of supply is outside India as per Section 13(2) of the IGST Act.
- Payment was received in Great Britain Pounds.
- The supplier and recipient are separate legal entities, not merely establishments of a distinct person.

3. Applicability and Rate of IGST for Export Services:
The Authority concluded that the services rendered by the Applicant qualify as export of services, making them zero-rated supplies under Section 16(1)(a) of the IGST Act, 2017.

Ruling:
The supply of information technology-enabled services rendered by the Applicant to the recipient qualifies as export of services under Section 2(6) of the IGST Act, 2017, and is considered a zero-rated supply under Section 16(1)(a) of the IGST Act, 2017.

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