Conference Sponsorship from Outside India

[Ajay Sachdeva]

We are proprietorship firm. We are organizing an international Conference at New Delhi next year ie Feb 2019. We are expecting to receive sponsorship for the same from some overseas companies. Do we need to charge them GST for the same?

[DR.MARIAPPAN GOVINDARAJAN]

In my view GST is payable on reverse charge basis.

[Ajay Sachdeva]

Does the reverse charge mean that we charge the client and they can claim back. How does it work?

[DR.MARIAPPAN GOVINDARAJAN]

Under Reverse charge mechanism the service recipient is to pay GST as if he is a service provider and he can claim input tax credit.

[KASTURI SETHI]

I support the views of Dr.Govindarajan Sir.

[Ravikumar muthusamy]

RCM? still applicable other than GTA?

[KASTURI SETHI]

Yes. RCM Applicable other than GTA in the context of query.

[Ajay Sachdeva]

Thank you for your clear response. It is greatly useful and appreciated.

[Brijesh Verma]

Dear Mr. Sachdeva

I respectfully and humbly differ with the views expressed by Hon'ble subject experts in your matter.

In my view, the receipt of sponsorship amount by your Indian proprietorship firm is against 'sponsorship services provided by' your Indian firm and not against any 'services received' by it. This fact, therefore, makes your Indian entity a service provider rather than a service recipient.

It is interesting to note that sponsorship service is one category that has created doubts ever since its inception as to who is the service provider and who is the receiver of services. Please note that in case of sponsorship services, the provider is the person who 'receives the sponsorship money' and the person paying the money is 'service receiver'. Even technically, it is only a receiver of services (here sponsorship service in your case) who makes the payment (the foreign companies, in your case).

Therefore, RCM applicability is absolutely out of the equation since your proprietorship firm is a service provider here and in terms of Notification No. 10/2017 (ITR), RCM (if at all applicable) is on service receiver.

Now coming to the taxability of your matter, please refer section 13(5) of the IGST Act which specifies the place of supply of services supplied by way of admission to, or organisation of a cultural, artistic, sporting, scientific, educational or entertainment event, or a celebration, conference, fair, exhibition or similar events, and of services ancillary to such admission or organisation, shall be the place where the event is actually held.

In my humble opinion, therefore, your firm must charge tax on such sponsorship amount separately from the foreign companies.

Respected experts may kindly correct my version and I shall be more than happy to rectify the errors, if any, in my understanding.

Regards,

Brijesh Verma

[KASTURI SETHI]

Sh.Brijesh Verma Ji, . Thanks for throwing more light on the issue.

[Ganeshan Kalyani]

In both way, tax is payable by the querist.

AI Summary

Reverse charge mechanism versus supplier charging GST on sponsorship: characterisation and place of supply determine tax liability. Whether GST applies to overseas sponsorship of an Indian conference hinges on characterisation: one view treats the Indian organiser as a service recipient liable under the reverse charge mechanism and able to claim input tax credit; the opposing view treats the organiser as the service provider obligated to charge tax because sponsorship is a service provided by the party receiving sponsorship. The place of supply for event organisation is the location where the event is held, which supports taxation in India for services related to the conference.