E-Firc for Export of Service without payment of tax

[Shan S]

Some of the indian banks are not giving e-firc for gst- export of service.

They give transaction advice instead. Can that be used as gst while availing Export of service without payment of tax?

Is transaction advice in same line with FIRC? if not what steps to be followed

[YAGAY andSUN]

Yes. For GST purposes, an FIRC is not expressly prescribed under the GST law as the only acceptable proof of receipt of export proceeds. The key requirement under Section 2(6) of the IGST Act for export of services is that payment for the service is received in convertible foreign exchange (or in INR wherever permitted by RBI).

In recent years, many Indian banks have discontinued issuance of physical/e-FIRCs for routine export transactions and instead issue documents such as:

• Foreign Inward Remittance Advice

• Credit Advice,

• Inward Remittance Certificate (IRC),

• Transaction Advice,

• SWIFT message details, or

• BRC in applicable cases.

A Transaction Advice can generally be relied upon as evidence of receipt of export proceeds if it clearly contains:

• Name of remitter,

• Foreign remittance details,

• Amount received,

• Currency,

• Purpose/nature of remittance,

• Date of realization, and

• Bank authentication.

However, a Transaction Advice is not strictly the same as an FIRC. An FIRC is a formal certificate issued by an authorised dealer bank certifying receipt of foreign exchange, whereas a Transaction Advice is primarily an account-level confirmation of the inward remittance.

From a GST perspective, the emphasis is on proving that:

1. The recipient is located outside India;

2. The service qualifies as export of service; and

3. Consideration has been received in convertible foreign exchange (or permitted INR).

Accordingly, taxpayers generally maintain a combination of:

• Export invoice,

• LUT (if applicable),

• Transaction Advice/FIRA,

• Bank account statement showing credit,

• SWIFT message/remittance details, and

• Agreement or correspondence with the foreign customer.

As a practical step, you should obtain written confirmation from your bank regarding the nature of the Transaction Advice and retain it along with bank statements and remittance details. If the bank issues a Foreign Inward Remittance Advice that is generally considered a stronger document than a simple transaction advice and is commonly accepted during GST audits and refund proceedings.

Therefore, while a Transaction Advice is not identical to an FIRC, it can generally serve as supporting evidence of realization of export proceeds when read together with the bank statement and remittance records. For GST refund claims relating to unutilized ITC on export of services under LUT, maintaining a complete documentary trail is advisable to avoid disputes during verification.

AI Summary

Export of services documentation: transaction advice may support proof of foreign exchange receipt under GST. For GST purposes, an FIRC is not the only proof of receipt of export proceeds for export of services without payment of tax. The essential requirement is receipt of consideration in convertible foreign exchange, or permitted INR, while the service satisfies export conditions. A Transaction Advice can generally be used as supporting evidence if it contains the remitter's name, remittance details, amount, currency, nature of remittance, date of realization, and bank authentication.