Reverse Charge on import of services from affiliate company

[Yatin Bhopi]

Dear Sir

We have parent company abroad who give us various services like Professional, IPR, management consultancy services etc. The billing cycle is quarterly (we cant shift billing cycle on monthly basis) and they also raise the invoice and we make payment on due date.

Since billing cycle is quarterly we make monthly provision for expenses in the books of accounts. In service tax we used to make payment on provision basis. many times provision was excess as compare to invoice raise by parent company and we used to adjust this excess payment for making payment of service tax subsequently in next month as allowed in rule 6(4A). but under GST there is no self-adjustment allowed and only way to get excess payment is refund.

Since affiliate company is issuing invoice and we also make payment to them and accounting entry for provision for expenses is done as per accounting requirement, Is there any way(since wording in the act is entry in the books)? or can we pay service tax when we make payment to associate company

logic behind making assesses to make payment of entry in the books of account is many times sister concerns are giving various services to each other but not raise invoice or make payment to each other instead they do only book adjustment by passing accounting entries. in our case raising of invoice and making payment is also happening.

Please share your views

AI Summary

Understanding Reverse Charge on Imported Services from Affiliates Under GST: Rule 47 Offers Invoicing Flexibility An individual inquires about handling reverse charge on services imported from an affiliate company under the Goods and Services Tax (GST) framework. The issue arises due to the quarterly billing cycle and the inability to adjust excess payments as previously allowed under service tax rules. Two responses are provided: one suggests using Rule 47 of the CGST Rules, 2017, which allows flexibility in invoicing for certain services, and the other emphasizes that imported services from a related entity are taxable under reverse charge, with the time and value of supply determined by GST regulations.