Service tax for IT consultancy to UK/US client

- Yes you are correct, it will be treated as export of services and to export without payment of taxes he should apply for LUT before raising an invoice. GST registration will be required after crossing the threshold limit of Rs.20 lacs. Invoice may be raised in INR or foreign currency but the consideration should be received in foreign exchange and within 90 days from the date of invoice. He should collect FIRC from the authorised dealer. Invoice should be properly drafted. He can also claim refund of ITC on expenses related to the profession.

Hello,

Yes, this supply of service would be considered as Export of Services.

For the supply of such services without payment of GST, the service provider would be required to file LUT before supplying such services. 

The consideration for export services must be received in convertible foreign currency.

I hope this answer satisfies your requirements. For a detailed resolution of your query, you can contact us directly or take a phone consultation.

Regards,

CA Hunny Badlani

Dear Sir,

Hope you are doing well !!

Yes, your understanding is correct.

The above services will be treated as export of services.

Regarding GST Liability, Since this would be considered as Export of Services, you have two options:

First, to apply for LUT for a F.Y. and then supply services without payment of IGST on such services.

Second, supply such services with payment of IGST at 18% without LUT and then later claim the refund of such IGST paid.

We may assist you in entire procedure.

It is advisable to take a phone consultation for detailed discussion.

LUT is letter of undertaking

FY is financial year

Hi,

As per your query GST registration is mandatory and No need to pay any tax on export of service if you furnish Letter of Undertaking(LUT), it is basically a declaration to be submitted to GST authorities to export Goods/Services without payment of tax.

Regarding invoice in GST, Tax invoice is required to be issued and you have to specifically mentioned after the word tax invoice, "Supply meant for export under Letter of Undertaking without payment of IGST".

It is mandatory requirement to receive payment in convertible foreign exchange and not in INR to be able to qualify as an export of service in GST otherwise you would be required to pay Tax on such transaction.

and FY in this context means Financial year for which the relevant compliances needs to be followed.

Hope i am able to solve your query. 

Please do rate if you like the consultation.

For any further query, contact me on the given number

Thanks & Best regards

CA Shubham Bansal

LUT-A Letter of Undertaking (LUT) is a document that exporters can file to export goods or services without having to pay taxes.

FY-A Financial Year (FY) is the period between 1 April and 31 March – the year in which you earn an income.

He needs to add GST if the total billing exceeds Rs. 20 lakh if he has any billing other than you as well.

If you pay in USD no GST would be charged even after 20 lakh if he has LUT "Letter of undertaking"

Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement. You can even book phone consultation for further personal assistance.

Thank you.

Hi,

While to conclusively answer your question, we need to understand the services in detail. However, generally the services would qualify for the export of services if consultant is raising invoices in foreign convertible currency (i.e. Dollar/GBP/EURO etc.). Once it is qualified as export of services, consultant would not collect GST/service tax from you.

LUT is the undertaking for export of services without payment of taxes. FY will be from April to March.

Hi

Yes your understanding is absolutely correct.

This service will fall under export of service.

Lut means letter of undertaking

Letter of Undertaking or LUT is an undertaking filed by an exporter of goods or service which permits him to export goods or services without payment of IGST subject to the condition that he will complete the process of export of goods or services within the prescribed time limit

FY means financial year i.e.april to march.