TaxTMI 
TaxTMI 
XYZ exported goods without payment of GST to PQR, USA. The product design for the same was made by XYZ as per the requirement of PQR and charges for the same was separately recovered from PQR by issuing a service invoice as ‘Design Service Charges’. Is XYZ required to pay GST on the amount recovered from PQR?
Design Service Charges
28 Jul 2021 
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GST on design services: charges tied to exported goods may be treated as integrated supply, not taxable.
GST liability on separately invoiced design charges hinges on their characterisation: where the charges have nexus with and are integrated into exported goods, they are treated as part of the export and not subject to GST, with the burden of proof on the manufacturer exporter; alternatively, if the design is an independent supply, it may qualify as an export of service to the foreign recipient. (AI Summary)
GST liability on separately invoiced design charges hinges on their characterisation: where the charges have nexus with and are integrated into exported goods, they are treated as part of the export and not subject to GST, with the burden of proof on the manufacturer exporter; alternatively, if the design is an independent supply, it may qualify as an export of service to the foreign recipient. (AI Summary)