Introduction: This article discusses in detail about GST taxability of “provision of service” to overseas branch & its place of supply under GST.
Query: As per Section 2(6) of IGST Act, “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; 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;
In view of above if services provided to overseas branch would not be eligible as export of services due to specific exclusion for such transactions in the definition of “export of service”.
Will this sale to Overseas branch be liable for GST Payment or be treated as non-taxable supply( since place of supply is in non taxable territory). Please clarify.
Ans: As per section 2(6)(v) of IGST Act, “Provision of Services” to overseas branch cannot treated as “ Export of services”.
So such “Provision of Services” to overseas branch cannot be treated as “Zero-rated supply” u/s 16(1) of IGST Act.
Recipient of services being outside India is not criteria for such supply to be non taxable supply.
Furthermore, taxability & place of supply provisions have been specifically provided for where the location of the supplier or the location of the recipient is outside India u/s 13 of IGST Act.
So, “Provision of Services” to overseas branch is taxable services.
General Rule Section of section 13(2) provides that wherein either location of the supplier or location of recipient of service is outside India, the place of supply would be:
a. The location of recipient of services, or
b. The location of supplier of services if location of recipient is not available in ordinary course of business.
In given case, the recipient of services is the overseas branch of service supplier, so the place of supply would be location outside India.
Accordingly, IGST is payable on such “Provision of Services” to overseas branch with no refund.
The author is a practising CA based in Delhi and is registered Insolvency Professional. He can be reached at firstname.lastname@example.org , Mob. +91 9953587496.
Disclaimer: The views expressed in this article are strictly personal. The content of this document are solely for informational purpose. It doesn’t constitute professional advice or recommendation. The Author does not accept any liabilities for any loss or damage of any kind arising out of information in this article and for any actions taken in reliance thereon.