The circular addresses the valuation of imported services from a ...

A new circular clarifies valuation of imported services from related parties for full tax credit. Invoice value equals open market value.

Circulars     GST

June 27, 2024

The circular addresses the valuation of imported services from a related person when the recipient is eligible for full input tax credit. It clarifies that where no consideration is involved, and the activities are not considered supplies by the related person in India, the value declared in the invoice by the recipient may be deemed the open market value. The circular references Rule 28 of the CGST Rules, emphasizing that where full input tax credit is available to the recipient, the declared value in the invoice is deemed the open market value. It extends the principles applied to domestic related parties to foreign entities providing services to related parties in India. The recipient in India must pay tax under the reverse charge mechanism and issue a self-invoice. The circular instructs field formations to publicize its content and invites feedback for implementation issues.

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