Documents to be issued or raised while collecting advance payments etc

[mathur ramachandran]

1. A German company is executing a project in India for their client in India and my client is giving technical support (water flow measurement) to the said project under a service contract with the German Company for about 3 crores. My client has received an advance payment of ₹ 5000000/- on 1.11.19 from the German company. .The contract is still at the execution stage only. Should he raise a tax invoice for the same at this stage on the German company? If not what other document he has to raise in respect thereof at this stage?

2.My client has executed a service contract (water flow measurement) (export of service) in Sri Lanka on 3.1.20 and has raised an invoice for 90949/- . No GST is levied in the invoice. My question is whether it can be treated as zero rated or whether applicable GST has to be paid thereon

Ca M S Ramachandran

ph 91-9447776812

[KASTURI SETHI]

1. At this stage, tax invoice cannot be issued. Voucher is to be issued. Go through the following:-

"Section 2 (118) of CGST Act “voucher” means an instrument where there is an obligation to accept it as consideration or part consideration for a supply of goods or services or both and where the goods or services or both to be supplied or the identities of their potential suppliers are either indicated on the instrument itself or in related documentation, including the terms and conditions of use of such instrument;"

2. It will be zero rated supply, if you qualify the following conditions :

Section 2 (6) of IGST Act "export of services” means the supply of any service when, -

(i) the supplier of service is located in India;

(ii) the recipient of service is located outside India;

(iii) the place of supply of service is outside India;

(iv) the payment for such service has been received by the supplier of service in convertible foreign exchange [or in Indian rupees wherever permitted by the Reserve Bank of India]; and

(v) the supplier of service and the recipient of service are not merely establishments of a distinct person in accordance with Explanation 1 in section 8;

[Ganeshan Kalyani]

I agree with the views of Sri Kasturi Sir.

AI Summary

Export of services zero rated when supplier in India, recipient and place of supply abroad, and payment in foreign exchange. On receipt of an advance for an in progress service contract a voucher - not a tax invoice - should be issued; a voucher evidences an obligation to accept it as consideration and may indicate the services or potential suppliers. A supply to a foreign recipient is zero rated as an export of services only if the supplier is in India, the recipient and place of supply are outside India, payment is received in convertible foreign exchange (or as permitted by the Reserve Bank), and the parties are not mere establishments of a distinct person.