Export of services - GST Ready Reckoner - GST

As per Section 2(6) of IGST Act Export of Services means the supply of any service when, the following 5 conditions have been prescribed as necessary for a supply to qualify as export of service:- (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 or in Indian rupees wherever permitted by the Reserve Bank of India; 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 . For Clarification on export of services under GST refer Circular No. 78/52/2018-GST dated 31.12.2018 Illustration:- ABC Ltd. India has received an order for supply of services amounting to $ 5,00,000/- to a US based client. ABC Ltd. India is unable to supply the entire services from India and asks XYZ Ltd. Mexico (who is not merely an establishment of a distinct person viz. ABC Ltd. India, in accordance with the Explanation 1 in Section 8 of the IGST Act) to supply a part of the services (say 40% of the total contract value). ABC Ltd. India shall be the exporter of services for the entire value if the invoice for the entire amount is raised by ABC Ltd. India. The services provided by XYZ Ltd. Mexico to the US based client shall be import of services by ABC Ltd. India and it would be liable to pay integrated tax on the same under reverse charge and also be eligible to take input tax credit of the integrated tax so paid. Further, if the provisions contained in section 2(6) of the IGST Act are not fulfilled with respect to the realization of convertible foreign exchange, say only 60% of the consideration is received in India and the remaining amount is directly paid by the US based client to XYZ Ltd. Mexico, even in such a scenario, 100% of the total contract value shall be taken as consideration for the export of services by ABC Ltd. India provided integrated tax on import of services has been paid on the part of the services provided by XYZ Ltd Mexico directly to the US based client and RBI (by general instruction or by specific approval) has allowed that a part of the consideration for such exports can be retained outside India. In other words, in such cases, the export benefit will be available for the total realization of convertible foreign exchange by ABC Ltd. India and XYZ Ltd. Mexico. As per An Education Guide - What does the export of a service mean under the new system? Export of services shall now be governed by new provisions in the Service Tax Rules 1994 , namely Rule 6A. The essential requisites before a service can be designated as export service are: It must be a service as defined under section 65B(44) by a service provider located in the taxable territory to a service receiver is located outside India the service is not a service specified in the negative list the place of provision of the service is outside India the payment for such service is received by the service provider in convertible foreign exchange the service provider and service receiver are not merely establishments of a distinct person by virtue of item ( b ) of Explanation 2 of section 65B(44) of the Act The answer to all questions above must be yes to avail the status of export of service.