Withholding tax on export of computer software

[Raam Srinivasan Swaminathan Kalpathi]

The client renders software consultancy services to a company in Japan.  The japanese companys tax auditors have advised their client to treat this as fees for technical services - subjected to 10% withholding taxes in Japan.

For reporting of exports in the GST portal should we report only the FIRC amount or the gross amount?  The japanese customer provides us details of withholding taxes with which we avail foreign tax credit while filing Income-tax Returns.  Request distinguished colleagues to clarify.  Thanks

[Sadanand Bulbule]

Exports under GST must be reported of the gross invoice value, since foreign withholdiing of tax is an Income Tax deduction and not a reduction in consideration. FIRC reflects only net realisation and it is the proof of payment.

[KASTURI SETHI]

I fully support the reply of Sh.Sadanand Bulbule, Sir. Accurate and to the point  reply. 

AI Summary

Software consultancy exports under GST: report gross invoice value, not net FIRC receipts after foreign withholding tax deductions Exports of software consultancy services under GST are to be reported at the gross invoice value and not restricted to the net amount received under the foreign inward remittance certificate. Foreign withholding tax deducted by the overseas customer, even if characterised abroad as fees for technical services and subjected to withholding, is treated as an income-tax deduction and does not reduce the consideration for the supply for GST reporting purposes. The FIRC evidences net realisation and functions as proof of payment, but does not determine the taxable export value.