Invocing by Branch in India to its Headquarters Abroad

[Lakshmi subramanian]

Dear Experts

Great Day

Am pleased to enter into this August Forum on this Independence Day.

Am practicing Chartered Accountant and am giving below the short notes relating to the captioned title above pertaining to my client.

Short Notes on Title above

My client is incorporated abroad and having branch in India as per Permission granted by RBI . The services include submissions of manifests to the customs on behalf of airlines through online by using the web portal of the client and Indian customs.. The branch raises the invoices on the airlines in India with applicable service tax and adhere the service tax compliance. Few airlines are having global contract and straightaway making remittance in its HQ. Branch raises invoice on those cases to HQ with service tax and adhere the service tax compliance. This is on the background that services rendered and consumed in India and mere remittance alone in HQ and to avoid any complications Management has treated like domestic transactions and adhere the service tax compliance.

Under GST scenario, the Management decided to use the same method to adhere GST by raising invoices on HQ since supply and consumption of services in India.

Trust the above short notes adequate for query mentioned below and further required information will be provided within our limits.

Query No 01.

Whether CGST and SGST rate (9%+9%) applies or IGST 18% rates applies on invoices raised by branch on HQ

Query No.02

HQ is not having GSTIN. The invoicing amount crosses the basic exemption limit. How to upload GSTR1 without GSTIN

Query No.03

Is there any issue on taking input credit due to query no. 02

Requesting you to share views on above queries.

Thanks in Advance

With Warm Regards

Mr.Lakshmi

[Rajagopalan Ranganathan]

Sir,

My answer is as indicated below: -

Query No 01.

Whether CGST and SGST rate (9%+9%) applies or IGST 18% rates applies on invoices raised by branch on HQ.

Ans: If the registered office or branch of the Airlines and the branch of your client is located in the same state then CGST and SGST rate (9%+9%) will apply.

If the registered office or branch of the Airlines and the branch of your client is located in the different state then IGST @ 18% will apply.

If the Air Lines do not have an office in India and you are raising the invoice on their office located in non-taxable territory, then The Air Lines has to follow the provisions of rule 13 of GST Rules, 2017.Normally the Air Lines which are registered in non-taxable territory will have a branch office in India.Therefore I require further details regarding this.

Query No.02

HQ is not having GSTIN. The invoicing amount crosses the basic exemption limit. How to upload GSTR1 without GSTIN.

Ans: Since your client has a branch office in India then the branch office has to get registered under GST Act since the branch office will have a PAN. Since this branch office is providing services to the Air Lines, this branch office will raise invoices on the Air Lines for provision of service.GSTR1 is to be filed by the branch office.

Query No.03

Is there any issue on taking input credit due to query no. 02

Ans: In your case the question of paying tax under reverse charge does not arise.Hence input tax credit will be available to you and credit of input tax is available only to the recipient of the service provided by you.

Since you are registered as a branch of your principal and filing GSTR1you can avail the input tax credit of taxes paid on input services/inputs.

 

[Lakshmi subramanian]

Dear Rajagopalan Ranganathan

Thanks for your reply.

Further to your reply on Query no.01, am giving below additional information.

The airlines are having branches all over India, but as per the global contract the remittances are made in HQ abroad. Hence the basic classifications of the address in inter state and intra state are difficult to be ascertained. The HQ address is in abroad no GSTIN where as its branch is having GSTIN. Trust the above additional information will be helpful to arrive the conclusion whether CGST 9% +SGST9% or IGST9% is applicable.

Further to your reply on query 02.

The branch has registered with GSTIN and will upload GSTR1. Since the HQ is not having GSTIN, how we can upload the invoices? is it correct to upload the invoices as unregistered dealer?

Further to your reply on query 03,

Yes, agreed that there won't be any issue in taking inputs credits but am waiting response for q1 & q2 after submitting the additional information. We need to revisit this after having clarity on query 1 & 2

[RAMESH PRAJAPATI]

1) Contract of supply of service is between your client's HO and Airlines. Both are outside India.

2) Your client is rendering services in India and have branch office registered under GST in India.

3) Airlines also has branch office in India for doing business and may be registered under GST.

4) Service provided in India is taxable and place of supply is to be determined by considering location of supplier of service (your clients office) and the location of service recipient (Airlines branch office).

5) HO is situated abroad but it is not an export of service. Branch office in India has to pay tax and file GST returns as required under GST.

[Lakshmi subramanian]

Dear Ramesh Prajapati

Thanks for sharing your views which have been precisely mentioned in short notes. Requesting you to share your views on queries asked in same order for better understanding. You are also requested to see the additional information provided when views are shared by another professional.

[Rajagopalan Ranganathan]

Sir,

Your further queries are answered as under: -

The airlines are having branches all over India, but as per the global contract the remittances are made in HQ abroad. Hence the basic classifications of the address in interstate and intra state are difficult to be ascertained. The HQ address is in abroad no GSTIN where as its branch is having GSTIN. Trust the above additional information will be helpful to arrive at the conclusion whether CGST 9% +SGST9% or IGST9% is applicable.

Since both the receiver and provider of service are having branch offices in the taxable territory and are duly registered with the tax authorities the GST is payable by your client’s branch office as already suggested.

Further to your reply on query 02.

The branch has registered with GSTIN and will upload GSTR1. Since the HQ is not having GSTIN, how we can upload the invoices? is it correct to upload the invoices as unregistered dealer?

Since your client’s branch office is registered with the tax authorities they have to upload GSTR1. Your HQ need not get registered since they are receiving payment. As per CGST Act, 2017 the taxable person is one who is registered under the Act. In the invoice it is sufficient to mention GSTIN of your branch. Therefore question of uploading the invoice as unregistered dealer does not arise. Moreover in the registration certificate the name of you client alone will be mentioned as registered person and only address will be Indian address.

AI Summary

Place of supply determines CGST/SGST or IGST; Indian branch must register, invoice with GSTIN and file GSTR 1. Whether central/state GST or integrated GST applies depends on the place of supply and locations of supplier and recipient: same State establishments attract central and state GST, different States attract integrated GST, and supplies to locations outside the taxable territory require application of place of supply rules. An Indian branch rendering services in India must register under GST, file GSTR 1 and issue invoices quoting its GSTIN; the foreign head office need not obtain GSTIN merely for receiving remittances. Input tax credit is available to the registered recipient and the branch can claim credit on inputs used.