Clarification on GST reporting for payment from foreign company received in INR

[Tushar Malik]

I provided services to a foreign company (based in Malaysia) for:

1. Opening its Demat account in India,
2. Obtaining its PAN number in India, and
3. Assisting in filing its ITR in India.

The payment was directly received in my bank account from the foreign company in INR. The bank deducted some service charges on this payment. I do not have any proof that the payment was received in foreign currency, and I also do not know the actual currency in which it was sent from their side.

Since I do not have any such proof, I am treating this as an Indian payment. Even I do not want to claim any benefit related to export of service and I am ready to pay GST. However, I need clarification on the following points:

• In GSTR-1, should I still show this as export of service or as a normal domestic taxable supply?

• If it is not considered export of service, what would be the appropriate reporting column?

[Sadanand Bulbule]

The place of supply of subject services is related to Indian statutory regulations like DEMAT Account, PAN, ITR.This qualifies as " domestic service" and not export of service in terms of Section 2[6] of the IGST Act, 2017.

In GSTR-1, it is to be declared in B2C or B2B column depending upon the GSTIN of the recipient, if any.

[KASTURI SETHI]

                                 I fully support the views  of Sh.Sadanand Bulbule, Sir. It is not export of service. Place of supply is in India. Covered under Section 13 (8) (b) of IGST Act. It is B 2 B service.

[KASTURI SETHI]

Only receipt of payment in foreign exchange is not the only determinant factor. Place of supply is the determinant factor as already explained above. For parameters to qualify as export of service peruse the following :-

EXTRACT OF SECTION 2(6) OF IGST ACT                               

6) “export of services” means the supply of any service when, -

(i) the supplier of service is located in India;

(ii) the recipient of service is located outside India;

(iii) the place of supply of service is outside India;

(iv) the payment for such service has been received by the supplier of service in convertible foreign exchange [or in Indian rupees wherever permitted by the Reserve Bank of India]; and

(v) the supplier of service and the recipient of service are not merely establishments of a distinct person in accordance with Explanation 1 in section 8;                     

[Shilpi Jain]

In this case the place of supply is outside India. It is not an intermediary services.

Also just because the money is credited in your account in INR does not mean that forex has not been received.

In this case, the foreign bank would have remitted the INR by converting the forex. It is as good as receipt of forex and there are decisions in this regard.

 

[Shilpi Jain]

If you wish to pay tax then show it as a domestic supply. Showing it as an export of service would mean that you are considering it as an export of service and have exported it with payment of tax.

[KASTURI SETHI]

None can pay tax on ones own volition. GST  is required to be paid as per GST laws

[KALLESHAMURTHY MURTHY K.N.]

 Well said by Sri Kasturi Sethi Ji and Sri Sadananda Bulbule Sir. Any tax payable must be in accordance with the provisions of the relevant Acts and Rules framed thereunder. Any amount paid in the form of tax without a warrant cannot be assessed as tax.

[Sadanand Bulbule]

Tax  is not a figment of charity or donation.  It has to be paid, even if one is unwilling to pay it. “Wish & will” has no place under taxation system. 

AI Summary

Place of supply determines export status; report services with Indian place of supply as domestic supply in GSTR return. Place of supply governs export qualification; services tied to Indian statutory compliances have place of supply in India and are domestic services, not exports. Receipt in INR alone is not determinative; export requires recipient outside India, place of supply outside India, receipt in convertible foreign exchange (or INR where RBI permits), and non distinct person status. Report such transactions in the GSTR return as domestic taxable supplies and declare in B2B or B2C columns depending on recipient GSTIN. Tax payment and reporting must follow statutory provisions.