Zero rating of Export of service where consideration settled by book entry

[Vaishnavi Bubesh]

Dear Experts,

We are having query regarding the scenario where we are supplying service to recipient located outside India & POS is also outside India but we are not receiving the consideration in Foreign Currency due to the reason we have imported some services from the same person.

We are adjusting the amount receivable against the amount payable in our books. Only difference is settled in foreign currency.

Whether we can claim the benefit of zero rating in this case?

Whether this adjustment will fulfill the condition of 'amount of consideration should be received in foreign currency' as specified by Sec 2(6) of IGST Act?

Thanks in advance.

AI Summary

Zero-Rating Export Services Under GST: Book Entries Don't Qualify as Foreign Exchange Under Section 2(6) IGST Act A query was raised regarding the zero-rating of export services under GST when the consideration is settled by book entry rather than in foreign currency. The service provider, located in India, supplies services to a recipient outside India, with the place of supply also outside India. However, the payment is adjusted against services imported from the same recipient, with only the difference settled in foreign currency. Respondents mostly agreed that book adjustments do not meet the requirement of receiving payment in convertible foreign exchange as per Section 2(6) of the IGST Act, thus not qualifying for zero-rating. Some suggested consulting a FEMA expert for further guidance.