• Is GST applicable for Local Service, but invoiced in USD ? Can the foreign customer avail ITC ?

Hello,
Our Foreign Customer has supplied goods to their Customer in India.
We provide repair service during the warranty period to OUR foreign customer's Customer in India. 
The product comes from THEIR Indian Customer to us and we repair and return the products back to THEIR Indian Customer.
We invoice to OUR foreign customer for each product repaired in USD and receive the payment in USD. As the service is done in India, do we need to charge GST to our Foreign Customer? If yes, how can OUR Overseas Customer avail ITC ?
Asked 12 days ago in GST

Hello,

In this case, you may receive the payment in USD currency but the place of supply would still be in India and not outside therefore you do not qualify to be eligible for any sort of exemption. Hence GST is applicable and the same needs to be charged from your foreign customer.

In case your your aggregate turnover during the year is below the threshold of INR 20 lac then you don't need to register for GST. 

The foreign company won't be able to claim input until they are registered in India.

 

Best Regards, 

Vikram Aggarwal
CA, Gurgaon
46 Answers
6 Consultations

5.0 on 5.0

- Place of supply of services is in India therefore GST would be applicable @18%. GST would be an expense for the foreign customer. In Invoice, billing would be in the name of foreign customer, place of supply should be India and GST would be charged.

Vivek Kumar Arora
CA, Delhi
4135 Answers
365 Consultations

5.0 on 5.0

Hi,

 

As repair services performed in India, it is considered as supply location in Indian taxable territory, hence All conditions for export is not satisfied.  So GST would be liable to pay on such transaction and IGST will be charged as recipient of service is located outside india.

 

Your overseas customer will not be eligible to get credit of taxes, GST tax will be cost to him.

 

 

Arihant Kochar
CA, Navi Mumbai
3 Answers

Not rated

Hi

 

Yes you need to charge GST to your foreign customer as per place of supply will be India  &  they won't be able get credit any ITC on it.

Karishma Chhajer
CA, Jodhpur
2423 Answers
26 Consultations

5.0 on 5.0

Hi,

Since the work/repair is being done on goods supplied to you (located in India) so as per Place of Supply provision section 13 the place of supply is in India and therefore GST applicable even though the foreign customer is outside India.

For export of services there are many conditions to be fulfilled one of which is that in addition to the customer being outside India the place of supply should also be outside India which is not in the present case therefore it is taxable.

As far as billing the customer in foreign currency (USD) is concerned you can do that but then later while filing returns you will face problems since the portal only accept INR. Therefore two options are available with you.

1) Either you prepare invoice with both USD and INR (in different columns)

Or

2) You can prepare separate invoices one with INR for tax purpose and other in USD for customer having same date and invoice number

As far as availing ITC is concerned the foreign customer will obviously be registered under GST so he will not be able to avail ITC.

The GST amount will either become the foreign customer's cost or your cost as per contractual agreement between the parties.

 

Hope this helps

Altamush Zafar
CA, Kanpur
3 Answers

Not rated

Hi

 

Since the place of supply of services is in India, GST shall have to be charged even if the receipt is in USD since all the conditions of zero rated supplies are not fulfilled.

 

Since the foreign customer won't be registered under GST in India, ITC can't be claimed and the GST charged by you would be an expense for them.

Lakshita Bhandari
CA, Mumbai
5514 Answers
594 Consultations

5.0 on 5.0

Dear Sir,

 

Your service would fall under Sec 13(3)(a) of the IGST Act, which deals with Place of supply of services where location of supplier or location of recipient is outside India.

 

The relevant extract is

The place of supply of the following services shall be the location where the services are actually performed, namely:

(a) services supplied in respect of goods which are required to be made physically available by the recipient of services to the supplier of services, or to a person acting on behalf of the supplier of services in order to provide the services:

 

Hence, it is abundantly clear that in your case, the said service on the goods will be dealt with according to where they were repaired, and the same being in India would be subject to GST.

 

In relation to your second part of the query, the key component in order to avail ITC is to be registered under the GST Act, which I am assuming is not in the case of your overseas customer. Therefore, in this scenario, they cannot claim the ITC on the GST charged by you and the same would be a cost to either your overseas customer or to you depending upon the agreement executed.

 

Please advise in case of any other clarification.

 

Thanks & Regards,

CA Aditya Dhanuka. 

Aditya Dhanuka
CA, Kolkata
5 Answers

Not rated

Dear Sir,

 

Hope you are doing well !!

 

-GST would be applicable on the same as place of supply of services is in India.

 

-No, Foreign customer won't be able to claim ITC as they are not registered in India. 

 

 

 

Payal Chhajed
CA, Mumbai
5113 Answers
161 Consultations

5.0 on 5.0

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