Coverage of international transactions in GST
Are you making any international transactions? have a look at it
There can be instances when we feel that our transaction is export. But it may not be an export. What will be the taxability of international transactions ? when they will fall under GST? It seems quite simple but it is much deep and needs a detailed discussion. If you are making any outward or inward transaction from India. Or you are making any inward and outward from India. What can be the scenarios?
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Supplier is in India, the recipient is outside India, Pos Outside India
The first question is, do you know how to decide the Place of supply? In case of services involving any party outside India, it is covered by section 13 of the IGST Act.
Total 13 subsections. I have created a summary here for a quick reference.
| SS | Coverage | |
| 1. | applicability | when any of supplier or recipient is outside India |
| 2. | General rule | Location of recipietn=Place of supply (except ss 3 too 13 ) |
| 3. | PoS = where services are actually performed |
1. On goods (if via electronic mode, location of goods) 2. On person when physical presence is mandatory. e.g Training, transportation of goods. Exception When goods came for repair and exported without put to any use in India. |
| 4. | Supply i.r.t Immovable property | Where the goods are located or intended to be located |
| 5. | Admission to or organising an event | Location where the event is held. |
| 6. | above 3,4,5 from more than one location | PoS in taxable territory |
| 7. | multiple places in India | proportionate to consideration |
| 8. | LoS =Pos | Intermediary, Banking, Menas of transportation upto 3 months.(except air crafts and vessel) |
| 9. | Transportation of Goods except mail , courier | Destination of Goods |
| 10. | Passenger transportation | where the passenger embarks |
| 11. | Passenger vehicle onboard | first point of departure |
| 12. | OIDAR | location of online recipient |
| 13. | Right | govt to make rules |
Now, it is an export, when the supplier is in India. Recipient and Pos are outside India. Take care that if the consideration is not received in foreign exchange. It will not be an export anymore. Now what will happen in that case? is it taxable as a normal supply? Its not export, the benefit of zero-rating is not there. But the supplier is located in India. This transaction may fall in taxability.
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When the supplier , recipient both are in India but PoS is outside India?
I was unable to find any such instance when the supplier and recipient are in India but POs is outside India.
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When Supplier is in India , recipient is outside India but Pos is in India
In this case it will be taxable like a normal transaction. The Only thing is its nature will be inter-state. refect section 7 of The IGST Act. But the benefit of zero -rating will not be available.
e.g. When services are provided on goods located in India. But the recipient is outside India. Consideration may also have been received in foreign exchange. But this is not an export.
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When supplier is outside India, recipient is in India, Pos is in India
In this case tax will be payable in reverse charge. It is covered by reverse charge provisions. 101 st Constitution amendment Act provide that any import into India will be treated as inter state taxable supply.
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When the recipient is in India, supplier is outside India but PoS is also outside India.
In my view this transaction is outside the preview of GST. It is not liable for tax, neither in RCM.
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CA Shafaly Girdharwal
CA
New Delhi, India
CA Shaifaly Girdharwal is a GST consultant, Author, Trainer and a famous You tuber. She has taken many seminars on various topics of GST. She is Partner at Ashu Dalmia & Associates and heading the Indirect Tax department. She has authored a book on GST published by Taxmann.
