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

Place of supply determination may render exhibition intermediary services taxable in India despite events held overseas. Whether the retained fee for arranging Indian clients at overseas exhibitions is taxable depends on place-of-supply and intermediary status. Exhibition organisation attracts GST at 18%. If the event location is outside India and export conditions are met, the supply may be an export; but if the supplier is an intermediary, the place of supply is India, and GST applies. Receipt in Indian rupees and the recipient's location under place-of-supply rules are decisive for classification and tax liability.