GST
When a service counts as export for GST refund
Updated . Every paid answer is checked by a CA. Free AI answers are labelled until a CA verifies them.
Facts
Under Sec 2(6) of the IGST Act, a service is an export only if the supplier is in India, the recipient is outside India, the place of supply is outside India, payment is received in convertible foreign exchange or in Indian rupees where RBI permits, and the two are not merely establishments of the same person.
Provisions and law
- Sec 2(6), IGST Act 2017Conditions for a supply to count as export of services, including payment in convertible foreign exchange or INR as RBI permits
- Sec 16(1), IGST Act 2017Exports and supplies to SEZ units or developers are zero-rated
Analysis
A freelancer billing a UK company for design work and receiving GBP through a bank meets these conditions in most cases. But if the service is performed on goods physically in India, or the client is your own foreign branch, the answer can change. Place of supply rules decide many borderline cases, so check them before you treat an invoice as zero-rated.
Conclusion
- Check each of the five conditions for every client
- Confirm the place of supply under the IGST Act rules
- Keep the FIRC or bank advice showing foreign currency receipt
- Treat doubtful invoices as domestic until clarified
A Savvy can do this for you
Refund of ITC on exports without payment of tax, RFD-01
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