Export of services
This query is : Resolved
18 July 2019
One individual registered under GST in india is exporting services to Foreign Country but payment is being received in indian currency. How to raise invoice in this case...? Is it export of services...?
18 July 2019
May I know by which mean/gateway you are receiving the currency. You can convert it.
18 July 2019
we are providing services to X in foreign country and X is holding bank account in HSBC bank in india and payment will be made from this account in indian rupees.
{X gives some signed blank cheques to his friend in Mumbai and friend fills the amount and give it to vendors in india}
24 July 2024
In the scenario described, where an individual registered under GST in India is providing services to a foreign entity (X), but the payment is being received in Indian currency from X's bank account in India (HSBC Bank), it raises questions about the classification of this transaction as an export of services under GST rules.
### Classification as Export of Services
For a service to qualify as an export under GST:
1. **Place of Supply**: The place of supply for services determines whether it qualifies as an export. According to GST rules:
- The place of supply for services is generally the location of the recipient of services.
- Since X holds a bank account in India and the payment is made from that account, it suggests that the place of supply could be considered within India.
2. **Receipt of Payment**: Payment in Indian currency from X's Indian bank account may indicate that the consideration for the services is received in India, rather than in convertible foreign exchange.
### Considerations for Invoice and GST
Given the details provided:
- **Invoice Requirements**: If the service is not considered an export (because the place of supply is within India), the invoice should be raised as a regular domestic transaction. Include your GSTIN and charge GST at the applicable rate on the invoice.
- **GST Liability**: Since the service may not qualify as an export, GST would be applicable at the regular rate for domestic transactions.
- **Documentation**: Ensure proper documentation, such as invoices and payment records, to support GST compliance.
### Addressing the Scenario
1. **Clarification Needed**: It's advisable to seek clarification from a GST consultant or tax advisor regarding the specific nature of the services and the applicability of GST.
2. **Foreign Exchange Regulations**: Understand RBI regulations concerning payment in Indian currency for services rendered to foreign entities. Even if the payment is routed through an Indian bank account, it's essential to verify compliance with foreign exchange regulations.
3. **GST Compliance**: Adhere to GST provisions concerning invoicing, place of supply, and payment considerations. If uncertain, seek guidance to avoid incorrect classification and potential GST liabilities.
In summary, based on the information provided, the transaction may not qualify as an export of services under GST if the place of supply is considered within India due to the receipt of payment in Indian currency from X's Indian bank account. Seek professional advice to ensure accurate classification and compliance with GST regulations.
### Classification as Export of Services
For a service to qualify as an export under GST:
1. **Place of Supply**: The place of supply for services determines whether it qualifies as an export. According to GST rules:
- The place of supply for services is generally the location of the recipient of services.
- Since X holds a bank account in India and the payment is made from that account, it suggests that the place of supply could be considered within India.
2. **Receipt of Payment**: Payment in Indian currency from X's Indian bank account may indicate that the consideration for the services is received in India, rather than in convertible foreign exchange.
### Considerations for Invoice and GST
Given the details provided:
- **Invoice Requirements**: If the service is not considered an export (because the place of supply is within India), the invoice should be raised as a regular domestic transaction. Include your GSTIN and charge GST at the applicable rate on the invoice.
- **GST Liability**: Since the service may not qualify as an export, GST would be applicable at the regular rate for domestic transactions.
- **Documentation**: Ensure proper documentation, such as invoices and payment records, to support GST compliance.
### Addressing the Scenario
1. **Clarification Needed**: It's advisable to seek clarification from a GST consultant or tax advisor regarding the specific nature of the services and the applicability of GST.
2. **Foreign Exchange Regulations**: Understand RBI regulations concerning payment in Indian currency for services rendered to foreign entities. Even if the payment is routed through an Indian bank account, it's essential to verify compliance with foreign exchange regulations.
3. **GST Compliance**: Adhere to GST provisions concerning invoicing, place of supply, and payment considerations. If uncertain, seek guidance to avoid incorrect classification and potential GST liabilities.
In summary, based on the information provided, the transaction may not qualify as an export of services under GST if the place of supply is considered within India due to the receipt of payment in Indian currency from X's Indian bank account. Seek professional advice to ensure accurate classification and compliance with GST regulations.
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