Invoices by foreign company in INR and payment in INR

[rakesh kumar]

Sir

My query is related on the foreign services to be rendered by foreign company in India, these services are Supervision services related to equipment erection at site and site is located in India . The services will be rendered by foreign company for 200 days on intermediate basis and these 200 days services will be consumed in One financial year. Foreign company does not have any permanent establishment in India .

Following are my queries :

• Whether Foreign company can raise there invoice in INR and receive payment in this currency ? Any relevant circular of RBI in this regard.
• As services will be for 200 days ( not on continuous basis) in a financial year. whether that foreign company will be treated as PE in India

[Spudarjunan S]

Sir,

GST registration perspective -

You need to analyse how the foreign company is providing services in India either through physical presence or through online/OIDAR(Online Information Database Access or Retrieval)

If they are visiting India occasionally and providing services they might require to take GST registration as Non-resident Taxable Person based on their residence address in India subject to threshold limit(provided they will not provide any interstate supply).

If they provide as OIDAR they need to get registered mandatorily under section 24 of CGST Act, 2017.

If he is not required to get registered under the provisions of GST then the recipient has to pay under RCM for Import of services.

Payment Perspective -

You can make INR payment to foreign entity. Kindly refer notification no. FEMA 14(R)/2016-RB dated 02nd May 2016 issued by RBI.

AI Summary

GST registration for foreign service providers may be required; absent registration recipient must pay under reverse charge for imported services. Foreign suppliers providing intermittent onsite services in India may require GST registration as a Non Resident Taxable Person or, if classified as OIDAR, mandatory registration; absent supplier registration the Indian recipient must pay tax under the reverse charge mechanism on import of services. Rupee payments to the foreign entity are permitted per RBI notification FEMA 14(R)/2016 RB. The reply does not conclusively resolve whether the intermittent 200 days of presence creates a Permanent Establishment in India.