Export of Service

[Kaustubh Karandikar]

XYZ had exported equipments earlier which needs Quality Certification from a recognized agency in India. XYZ got done the technical audit and certification of the equipment before exporting the same. The charges incurred for this certification was recovered from the foreign customer.Is XYZ liable to pay GST on the amount recovered?

[Shilpi Jain]

It would be added in the value of the exports in terms of section 15 as it is incidental expenses incurred for making the supply. Hence a debit note can be issued and disclosed as a zero rated supply of goods.

[Ganeshan Kalyani]

Yes, as per sec 15(2)(c) incidental expense will form part of the value of supply.

Sec 15(2)(c) incidental expenses, including commission and packing, charged by the supplier to the recipient of a supply and any amount charged for anything done by the supplier in respect of the supply of goods or services or both at the time of, or before delivery of goods or supply of services;

AI Summary

Incidental expense inclusion in export value can be added to export consideration and disclosed as zero-rated supply. Certification charges recovered from a foreign buyer for pre-export quality audit constitute incidental expenses under section 15(2)(c) and must be added to the value of the export; the amount should be accounted for (for example by issuing a debit note) and disclosed as part of the zero-rated supply.