GST on import of service

[Kaustubh Karandikar]

XYZ(India) paying consideration to PQR, Germany (Parent company) for providing technical knowledge, designing of product and after sale service in relation to products manufactured by XYZ in India. The amount payable to PQR would depend on sales value of goods sold by XYZ. Is XYZ liable to pay GST on the amount paid to PQR?

AI Summary

XYZ's Payments to German Parent for Services May Trigger GST Under RCM; Agreement Review Suggested for Tax Clarity. XYZ, an Indian company, is paying its German parent company, PQR, for technical knowledge, product design, and after-sales services related to products manufactured in India. The payment amount is based on the sales value of goods sold by XYZ. The discussion centers on whether XYZ must pay GST on these payments. One response indicates that this constitutes an import of service, taxable under the reverse charge mechanism (RCM). Another response suggests that the principal supply must be identified to determine the service category, HSN code, rate, and place of supply, and advises reviewing the agreement terms thoroughly.