Providing Software Services from India - GST chargability

[Balakrishnan Ramalingam]

Dear sirs,

My client (Individual) is providing software services sitting in India to foreign concern. He receives payment through online payment service portals in Indian Rupees. (specifically not routed through approved banking channel). Now my questions are:

1. Should he be liable to GST?

2. If yes, can this transaction be considered as 'Export of Service?

3. If yes, can we claim 'zero rated' invoice and claim exemption by giving LUT? or alternatively can we pay GST and claim refund?

Thanks and regards

R.Balakrishnan FCA

[KASTURI SETHI]

Dear Querist,

Query-wise reply is as under:-

1.Yes.

2. Can be considered as export of service subject to the parameters laid down in Section 2(6) of IGST Act, 2017

3. Both options are available to you.

Pl. note that regarding the receipt of payment in Indian rupees, the words, ' [or in Indian rupees wherever permitted by the Reserve Bank of India] has been inserted in clause (iv) of Section 2(6) of IGST Act on 1.2.2019 by Section 2 of IGST Amendment Act, 2018 (32 of 2018) but the effective date is still to be notified. So you will have to wait for if the payment is to be received in Indian rupees. When the date will be notified, conditions may be enforced.

 

[Mahadev R]

I concur with Kasthuri Sir

[DR.MARIAPPAN GOVINDARAJAN]

I endorse the views of both the experts.

AI Summary

GST liability on cross-border software services: may qualify as export subject to conditions and receive zero rating or refund. Supplier of software services from India to a foreign concern is liable to GST. The supply may qualify as an export of services if statutory export conditions are met. Relief can be obtained either by treating the supply as zero rated through a Letter of Undertaking or by paying GST and claiming refund. An amendment permitting receipt in Indian rupees has been enacted but its effective date is not yet notified, so any change to payment in rupees treatment and attendant conditions is pending notification.