RCM payment by Exporter

[Shamim Ibrahim]

One of my client XYZ Ltd who is engaged in 100% export of Services utilises certain input services (Software rights) from a foreign company ABC who has no PE and GST registration in India. Whether XYZ Ltd requires to pay GST under RCM on the software rights purchased from foreign compnay ABC ?

The payments to ABC are on quarterly basis and the TDS provisions under Income tax Act has been complied.

Please advice.

Thanks in advance

[KASTURI SETHI]

Have you gone through the following circular ?

Online Information Database Access and Retrieval (OIDAR) Services in GST

C.B.E. & C. Flyer No. 42, dated 1-1-2018

[Shamim Ibrahim]

Sethi Sir if RCM is paid whether it is claimed as refund along with other IPT credit since company is 100% export oriented and no GST is payable as OPT

[Mohit Singhal]

GST is applicable under RCM on the software rights purchased from the foreign company by XYZ Ltd. and XYZ can also claim the refund of the same in case of export .

[YAGAY and SUN]

In addition to aforesaid views, following is required under C.7.3. of RBI's Master Direction of Import of goods and services in Non-physical Imports:-

(i) Where imports are made in non-physical form, i.e., software or data through internet / datacom channels and drawings and designs through e-mail / fax, a certificate from a Chartered Accountant that the software / data / drawing/ design has been received by the importer, may be obtained.

(ii) AD Category – I bank should advise importers to keep Customs Authorities informed of the imports made by them under this clause.para

AI Summary

Reverse charge on imported software rights is payable by the exporter, but refundable as input tax credit for exports.
Reverse charge applies where an Indian exporter procures software rights from a foreign supplier without GST registration; the exporter must pay GST under reverse charge and may claim that GST as input tax credit or refund for exported services where permitted. Compliance steps include obtaining a Chartered Accountant certificate evidencing receipt for non-physical imports and informing customs as guided by RBI, while TDS under income tax is a separate compliance matter.