Subsidy received from Foreign Government

[Priyesh Mamnani]

The company has received subsidy from foreign government, so whether it will be included in value of supply? As per section 15 subsidies from central and state government are excluded while calculating value of supply.

[KASTURI SETHI]

Dear Querist,

Pl. mention the nature of supply (in detail) against which you have received from foreign Govt..

[Priyesh Mamnani]

The company is japanese company providing technical training to young Indian students so that in future they can provide the Jobs to them. The expense of training are reimbursed by Japan Government by giving subsidy. There is also an MOU signed between India and Japan for this initiative.

So whether GST will be applicable? if yes will subsidy from japan government will be included in value of supply?

[Rajagopalan Ranganathan]

Sir,

In m opinion, it is includible in the value of supply because the provision of Section 15 (2) (e) is very clear and specific.

[KASTURI SETHI]

Dear Querist,

Subsidy received from foreign Govt. will be includible in transactional value under section 15(1) of CGST Act inasmuch as such subsidy does not qualify as exclusion clause under section 15(2)(e) of CGST Act. MOU between India and Japan will not help.

Also it is added that the above services supplied by the company does not qualify as export of service. Place of supply is in India as per section 13 (3)(a) of IGST Act. For more clarification go through AAR Maharashtra in respect of Bilcare Ltd. reported as IN RE: M/S. BILCARE LTD. [2019 (7) TMI 43 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA].

[YAGAY and SUN]

Please also do check whether the Foreign Contribution (Regulation) Act, 2010 will be applicable on such subsidy or not.

AI Summary

GST valuation: foreign government subsidy included in taxable value, and supply treated as located in India.
Subsidy paid by a foreign government to a supplier of training services in India does not fall within domestic statutory exclusions for government subsidies and is therefore includible in the transactional value for GST; the MOU between states does not change that treatment, and the supply is treated as located in India under domestic place-of-supply rules, not as an export.