Import and sale of software

[Kaustubh Karandikar]

XYZ(UK) is a parent company of PQR (India). XYZ has developed a software (Blue Box) which is cloud base software. XYZ will give this software to PQR without any charge. PQR will be selling this software in India to customers. PQR would also provide the hardware’s which will be procured from vendors within India and will be supplied to customers. Customer can subscribe the software and use it for pumps operations, maintenance, repairs. 1) Is PQR liable to pay GST on the software procured from XYZ on FOC basis since XYZ & PQR are related? 2) What is the rate of GST for this software?

[Nitesh Jain]

YES..Its import of services since place of supply is in India and since supply between related persons, Open market value needs to be ascertained by PQR limited for paying GST under RCM.

If ITC Available to PQR Limited then Value shown on Invoice by XYZ will deemed to be open market value.

[KASTURI SETHI]

I endorse the views of Sh.Parveen Maheshwari Ji.

AI Summary

Import of services: free related party cloud software supply attracts reverse charge with open market valuation for GST payment. Importation of cloud based software provided free by a related non resident to its Indian affiliate is treated as import of services with place of supply in India, attracting the Reverse Charge Mechanism; the Indian recipient must ascertain and pay GST on the open market value, and if eligible for Input Tax Credit the invoiced value declared by the supplier will be deemed the open market value.