Overseas Exhibition Tax

[Guest]

Dear All,

We are an exhibition service company and provide space to Indian companies at overseas exhibitions.

I would like to ask that if suppose, we receive INR 100 from our client and we forward INR 80 from the receipt to overseas organizer of exhibition for which we received INR 100 then what taxes (GST or Income Tax or both) will be applicable on our earning of remaining amount of INR 20!

I would request an expert to advise on it.

Thank you in advance.

Best regards...

[KASTURI SETHI]

Organizing exhibitions falls under HSN 998596 and it attracts GST @18% (9+9). In terms of Section 13(5) of IGST Act, the place of supply is where the event is held. Since the exhibition is held outside India, so it is export of service subject to fulfillment of other conditions.

Secondly, it appears to me you are playing the role of intermediary services. See the defintion of 'intermediary' as defined under Section 2 (13) of IGST Actwhich is as follows:

(13) “intermediary” means a broker, an agent or any other person, by whatever name called, who arranges or facilitates the supply of goods or services or both, or securities, between two or more persons, but does not include a person who supplies such goods or services or both or securities on his own account;

If your activity/supply falls under the category of 'intermediary' the place of supply will be in India as per Section 13(8)(b) of IGST Act. Tax rate remains the same.

How consideration is accounted for ? That is also crucial to arrive at final decision for correct classification as well as payment of tax.

[Shilpi Jain]

Since you are receiving consideration in INR, I am pressuming that your client is in India. So the provisions of section 12 of the IGST Act will apply to identify the place of supply (PoS).

The PoS could either be the location where the event is held (i.e. outside India) or the location of the recipient in terms of sub-section 6 or 7 of the IGST Act depending on the terms of the agreement.

However, as per my assumption if the recipient is in India it cannot be an export of service, whatever be the PoS.

[KASTURI SETHI]

Dear Querist,

The following extract of Board's circular may be useful for you :-

C.B.I. & C. Circular No. 88/07/2019-GST, dated 1-2-2019

AI Summary

Exhibition Services Tax Query: 18% GST on HSN 998596; Export Status Affected by Intermediary Role and Payment in INR. An exhibition service company inquires about the applicable taxes on their earnings when they receive INR 100 from a client and forward INR 80 to an overseas exhibition organizer. An expert explains that organizing exhibitions is taxed under HSN 998596 with an 18% GST. Since the exhibition is held abroad, it may qualify as an export of service. However, if the company acts as an intermediary, the place of supply is India, affecting tax implications. Another expert notes that if the client is in India and payment is in INR, it may not qualify as an export of service.