GST if Mony received in Convertible Currency

[NILESH PITALE]

Dear Expert

Our Client is dealing in Computer Hardware & software( Registered in Maharashtra), He Received order from Foreign Customer for Server, And as per Customer instruction Server has to installed in Maharashtra & Gujarat( at customer Offices) but payment we will received in Convertible Currency........ In this case what will be GST Taxation- If server installed in Mah and if installed in Gujarat---- Please guide

[Sadanand Bulbule]

Dear Sir

In terms of Section 2[5] of the IGST Act, in such transaction, there is no taking goods out of India to a place outside India. Payment in convertible foreign exchange does not alter the true nature of transaction. So decide the "place of supply of goods, either intra-state or inter-state" and then apply the correct rate of tax.

[KALLESHAMURTHY MURTHY K.N.]

Under GST, the place of supply shall be the location of the recipient. Section 13(2) of the IGST Act establishes that the place of supply of services, except those mentioned in sub-sections (3) to (13), is the location of the recipient. As per Sec. 13(6) of the IGST Act, where any services referred to in sub-section (3) or sub-section (4) or sub-section (5) is supplied at more than one location, including a location in the taxable territory, its place of supply shall be the location in the taxable territory.

IGST is payable where LUT is not operative.

[Shilpi Jain]

The transaction is of supply of a server.

Is it hardware or software? That is, is it supply of goods or serivces?

[Shilpi Jain]

In case it is supply of goods then it will not be an export transaction since goods have not gone outside India.

In that case the place of supply will be as per section 12 of IGST Act. Place of delivery to customer i.e. MH or GJ as the case may be. GST will have to be charged.

[KASTURI SETHI]

The foundation for providing service outside the country is hardware. It is not export of goods. Only receipt of foreign exchange will not qualify for export of goods. Other conditions have to be compiled with.

[KASTURI SETHI]

Pl.read, 'complied with' instead of 'compiled with'.

AI Summary

Place of supply rules: foreign currency payment does not make domestic server supply an export; tax follows location.
Payment in convertible foreign exchange does not make a domestically installed server an export. First classify the transaction as supply of goods or services. If goods remain in India, determine delivery location to decide intra state or inter state supply and charge GST accordingly. For services, apply the place of supply rule based on the location of the recipient; multi location supplies including taxable territory are treated at the taxable location. IGST applies for inter state supplies unless a valid LUT is in place.