BILL FROM OVERSEAS SHIP FROM INDIA

[CABIJENDERKUMAR BANSAL]

Hello

An Indian vendor sells goods in Bill to ship to model as follows:

Order received from Singapore company to ship goods to a delhi based company.

vendor sends goods to Delhi based company and bill to singapore company.

Singapore company makes payment of the bill to Vendor.

Now, Singapore company bill to Delhi based company adding a little margin but without GST and Delhi company pays to singapore company based on this invoice.

Is this valid transaction as per GST law , if yes, is there any liability for Delhi company to pay GST under RCM basis.

Regards

[YAGAY andSUN]

Since goods were not supplied physically out side of the India to Delhi based company, therefore it will be treated as local sales and GST will be applicable accordingly.

[Subhash Modi]

Please refer similar case under issue ID 114594 dated 09/05/2019 which was replied to my me vide Reply No. 31 dated 20/12/2019 which is as follows:

Reply to Ms. Neeta directly through e-mail (and copy + pasted for all others in the discussion forum).

Reply:

Since physical delivery of the goods was from India to within India you have done the right thing by raising a GST invoice akin to any domestic sale.

You can legitimately receive payment in free foreign exchange or from the INR balances held in India by the overseas bank of the 'bill to' party known as Vostro Account.

Though there is no export, still receipt of payment in FE or in Rupees held by foreign bank in Vostro A/c in India is permitted vide the following:

Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2016 as updated upto May 2019 (copy attached – appropriately highlighted).

Show this to bank and tell them not only export related payment but any other payment is allowed to be received in the manner prescribed in the said Regulations including receipt in free foreign exchange.

The purpose code will be as highlighted in the attached RBI Circular.

While you may succeed in getting your banker to convert the inward remittance to INR for your purposes, but the recipient (‘ship to’ party) in India of your goods may face difficulty with his bank in remitting the value of the goods in foreign currency for which the ‘bill to’ party must have given him a final value invoice. For any remittance to be made from India in foreign exchange there must be a proof of receipt in India of imported goods or import of services. But that is his (‘ship to’ party) botheration.

Any other participant in the discussion forum may contact me (svmodi.com) for soft copies of the RBI Regulations and Circular mentioned in this reply

[Subhash Modi]

Further to my reply at Sr. N. 2 dated 27-08-2020 for the benefit of readers and the contributors of the Discussion Forum I have prepared a very analytical flow and flaw chart in tabulated format clarifying a number of issues with the GST and FEMA and accounting. Visit my site: svmodi.com for my email IDs and send me email to enable me to forward the Flow and Flaw Chart Table in PDF or WORD format.

AI Summary

Domestic supply GST applies when goods are shipped within India; foreign payment receipt permitted under FEMA and RBI rules. Sale of goods physically delivered within India but billed to an overseas buyer is treated as a domestic supply and GST is chargeable as on any local sale. Vendors may receive payment in free foreign exchange or via an overseas bank's vostro account in India under FEMA and RBI rules, though banks and the Indian consignee may face documentary or remittance constraints; the issue of reverse charge liability is raised but not resolved in the replies.