Reverse charge on import of service for export

[Ankur Mittal]

Hi,

We are an online advertising firm and advertise for foreign companies on foreign sites which are viewable only in there countries. We pay to these foreign sites where advertisement is done and receive payment from foreign companies whose advertisements we are doing. Are we liable to pay reverse charge for payment made for advertisements to these foreign countries.

[Rajagopalan Ranganathan]

Sir,

You have to pay service e tax by reverse charge on the amount received from owners of foreign sites whether it is in the nature of rent or licence fee.

[Ganeshan Kalyani]

There is no exemption given in the law stating that if you are exporting the service and the input for providing that service then the input service should be exempt.

The import of service is subject to GST. You are liable to pay IGST under reverse charge. The export of service is however exempt.

[Ganeshan Kalyani]

In my view, the tax paid under reverse charge can be claimed as refund assuming that you don't have any domestic supply of service.

AI Summary

Online Ad Firm Questions Reverse Charge Liability on Foreign Ad Payments; Export Services Exempt, Import Liable for IGST. An online advertising firm inquires about their liability for reverse charge on payments made to foreign sites for advertisements. They advertise for foreign companies on sites only viewable abroad. One respondent advises that reverse charge service tax applies to payments received from foreign site owners, whether as rent or license fees. Another clarifies that while the import of services is subject to GST and liable for IGST under reverse charge, the export of services is exempt. Additionally, tax paid under reverse charge may be refundable if there is no domestic service supply.