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

GST Applies to Certification Costs Recovered from Foreign Customer per Section 15(2)(c); Treated as Zero-Rated Supply XYZ exported equipment requiring a quality certification from an Indian agency. The certification costs were recovered from the foreign customer. The question arose whether GST is applicable on the recovered amount. Two responses clarified that according to section 15 of the GST Act, incidental expenses, such as certification costs, should be included in the value of the exports. This means the amount recovered can be treated as a zero-rated supply, and a debit note can be issued. Both responses agree that these expenses form part of the supply's value under section 15(2)(c).