How do we determine whether IT services provided by us constitute export of service?
As per Sec 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 of the IGST Act, 2017;
All the following 5 conditions should be exclusively satisfied:-
- SUPPLIER of service is located IN INDIA
- RECIPIENT of service is located OUTSIDE INDIA
- PLACE of SUPPLY of service is OUTSIDE INDIA
- PAYMENT RECEIVED by the Supplier of Service in CONVERTIBLE FOREIGN EXCHANGE
NOTE: Provided Supplier & Recipient are not merely Establishments of a DISTINCT PERSON
The supply of any service is considered an export of service, where all the above conditions are met. Therefore, unless all the above conditions are not satisfied a supply of service cannot be regarded as exports and hence would be taxable even when place of supply lies outside India.
WHETHER SOFTWARE IS REGARDED AS GOODS OR SERVICES IN GST?
- As per Schedule II of the CGST Act 2017, following shall be treated as SUPPLY OFSERVICES
– Temporary transfer or permitting the use or enjoyment of any intellectual property right;
– Development, design, programming, customization, adaptation, up-gradation, enhancement, implementation of information technology software
- But, if PRE-DEVELOPED or PRE-DESIGNED software is supplied in any medium/storage (commonly bought off-the-shelf) or made available through the use of encryption keys, the same is treated as a SUPPLY OF GOODS classifiable under heading HSN-8523.