Application of GST for consultancy services given to US company

[Guest]

Sir:

We registered our LLP firm in Mumbai last year Sep 17, and as we do not expect our turnover crossing 20L we do not have GST number and not applied for it. We got a contract for consulting a US company for setting up their operations in Ahmedabad. (Their Ahmedabad entity is existing but for different business). The contract size is less than 20L. Our contract is signed with US company in USD and invoices will be raised in USD. My questions are -

(1) Will GST applicable for invoices under this contract? (2) Do I need to take GST number? (3) Or should we raise invoice to their Indian establishment in INR and get paid?

Thanks - Rajendra

[ANITA BHADRA]

Your contract is signed with US Company and you are providing services to US Company . This will be considered as Export of services . You need to take GST Number for this

In one of the FAQ answered by the Government and posted on twitter also vide dated 22nd December, 2017, they have clearly stated that export service is an inter-state taxable supply and liable for registration.

You can either export services under LUT or Pay IGST and claim Refund .

In my view , raising invoice to Indian Establishment is neither advisable nor it will be beneficial to you .

Experts in this forum are requested to share their views

[DR.MARIAPPAN GOVINDARAJAN]

In my view GST is not applicable since the turnover is less than 20 lakhs.

[ANITA BHADRA]

There is contradiction between Notification No 10/ 2017 dt 13.10.2017 ( exemption of registration for a person making INTER STATE SUPPLIES and Govt FAQ dt 22 DEC 2017 mentioned in my response .

[Guest]

Thanks Ms. Bhadra and Mr. Govindrajan for your valuable inputs. Great help.

Thanks - Rajendra

[KASTURI SETHI]

No benefit of threshold exemption limit on account of export turnover. Registration under GST is required irrespective of the quantum of turnover of export.

[Alkesh Jani]

Sir/Madam,

In this regards, my view is that, import of goods or services shall be treated as “Inter-State” but nowhere, it is stated that export is to be treated as “inter-state”. Moreover, as per the Trade Notice No.9 of DGFT, the person can export the goods based on PAN Number. This implies that GSTIN is not necessary unless specified under Section 24 of CGST ACT,2017. Therefore, GSTIN is not required for export of goods or services, if the turnover, is less than as prescribed under the law.

Our experts may correct me if mistaken,

Thanks

[KASTURI SETHI]

Sh.Alkesh Jani Ji, Your views are innovative and can be termed as though provoking.

[Alkesh Jani]

Sir,

With due regards, I invite your special attention to Para 3 of Trade Notice No.09 dated 12.06.2017, issued by DGFT, New Delhi. I request you to please re-comment based on above.

Thanks

[Alkesh Jani]

Sir/Madam,

Further, the aggregate turnover, is defined at Section 2 (6) of CGST Act,2017 and is as follows:-

“(6) “aggregate turnover” means the aggregate value of all taxable supplies(excluding the value of inward supplies on which tax is payable by a personon reverse charge basis), exempt supplies, exports of goods or services orboth and inter-State supplies of persons having the same Permanent AccountNumber, to be computed on all India basis but excludes central tax, Statetax, Union territory tax, integrated tax and cess;”

From above, it is crystal clear that GST registration is required if aggregate turnover is above 20 lakhs, which includes exports of goods and/or services. In the instant case, the querist has clearly stated that his aggregate turnover is below 20 lakhs, therefore, registration is not required.

I request that counter view, if any, may please be with proper authority.

Thanks

[ANITA BHADRA]

Dear Alkesh Sir

In response to your point :-

In this regards, my view is that, import of goods or services shall be treated as “Inter-State” but nowhere, it is stated that export is to be treated as “inter-state”

• Inter-State supply covered under (7(5)IGST act) . Export is treated as Inter-state supply under GST and IGST is charge on export.
•  

[Nash Industries I Pvt Ltd]

Please refer to Section 7(5) of IGST Act according to which Export is to be considered as Inter State Supply.

If it is a supply it can be either Inter state of Intra state. Export is not an Intra State Supply. Consequently it falls under the Inter State Supply and that is the reason for Section 7(5) of IGST.

Registration under GST is mandatory for Inter state supplies.

No GST is payable on export of services.

However, since the point of supply is in the taxable territory, IGST is payable as the location of supply of service is Gujarat and the location of the supplier of services in Maharastra.

Regards,

S.Ramaswamy

AI Summary

Consultancy Firm Debates GST Registration for Export Services to US Despite Turnover Below 20 Lakhs, Section 22 Implications A consultancy firm in Mumbai sought advice on whether GST applies to their contract with a US company, given their turnover is below 20 lakhs and they lack a GST number. The consensus among forum participants is that the consultancy services to the US company are considered an export of services, requiring GST registration despite the low turnover. Some argue that exports are treated as inter-state supplies under GST, necessitating registration, while others suggest that GST registration is not required if the turnover is below the threshold. The discussion highlights differing interpretations of GST regulations regarding export services.