Gst on reimbursement invoice to overseas entity for services provided in india

[manoj baby]

Dear Sir/Madam

Abc is a freight forwarder in india,renders services and raises invoices for reimbursement of expenses at cost (cha charges paid in india)to PQR overseas entity (associate co of abc based IN USA) .PQR renders services and bills to XYZ ( entity in china) for import of goods from china to sez located in Chennai in India. Is abc liable to charge gst on invoice for reimbursements raised on pqr. Wont this be treated as export as only place of supply condition is not satisfied rest all are satisfied under export definition under gst..

[Shilpi Jain]

For transportation of goods services, u/s 13 PoS would be in India (destination of goods)

Once PoS is outside India - tax will be liable for ABC and cannot be regarded as export.

You could consider if ABC can issue invoice to XYZ directly and PQR at the max could act as a pure agent whereby, any tax charged by ABC can be availed as credit.

[manoj baby]

Respected madam

Will ABC INDIA freight forwarding business qualify under section 13(9) for pos. Then final destination of good should be treated as pos i.e Sez which is zero rated..then our only violating condition in definition of export on pos will be fulfilled and can't then our invoicing to associate co outside India without gst for services given in india be treated as exports..

[KASTURI SETHI]

"Only place of supply condition is not satisfied rest all are satisfied under export definition under GST."

All conditions have to be satisfied to qualify as export of service. 'Place of supply' is most important determinant factor.

Is ABC in a position to prove itself as pure agent in the given facts ?

[Shilpi Jain]

Another point is that the zero rating is if the supply is made to an SEZ and not that the PoS has to be in SEZ.

AI Summary

Place of supply governs GST on freight reimbursements: if destination is in India, GST applies despite other export criteria. GST liability on reimbursements for freight forwarding turns on place of supply; for transportation services the place of supply is the destination of goods, and if that destination is in India GST applies. Export of services requires all statutory conditions, including place of supply, to be met. Zero-rating depends on supply being made to an SEZ entity rather than merely the place of supply being in an SEZ. Parties should consider whether the intermediary qualifies as a pure agent, which may affect tax treatment of recovered costs.