05 June 2018
Importer of services will have to pay GST on reverse charge basis.
Under GST, supply of goods and/or services in the course of import into India is be deemed to be supply in the course of inter-State trade or commerce, attracting the levy of IGST. Thus, all import of services into India will be treated as deemed inter-State supplies and would be subject to GST.
Though the IGST Act makes it clear that GST is applicable on imported services, calculating GST on imported services is slightly more complex. To find if an import of service would be liable for payment of GST, a few tests as under have to be applied.
1) Only import of services for consideration is considered a supply under the CGST Act, 2017. Thus, import of services without consideration would not be considered a supply and GST would not be levied. Thus, import and use of free services from Foreign Corporations like Whatsapp, Facebook and Instagram by all of us, without any consideration, are not liable for tax under GST. 2) However, if the import of service from a related person in the course or furtherance of business would be treated as supply, even if it is made without any consideration. Thus, if some services are imported or used by an Indian Branch of a foreign company, even without any consideration, it will be treated as a supply and liable for payment of GST.
Since I don't know description of services received by you from foreign entity, I will not comment on that. However, in general it RCM is applicable.
05 June 2018
Thanks CA Himanshu Ojha for detailed reply. What about Individuals who buy google space. Because as per GST Act, the ceiling limit of Rs. 20 lakh is not applicable for importer of services.
05 June 2018
Thanks CA Himanshu Ojha for detailed reply. What about Individuals who buy google space. Because as per GST Act, the ceiling limit of Rs. 20 lakh is not applicable for importer of services.
27 July 2024
Yes, GST is payable under Reverse Charge Mechanism (RCM) for services provided by foreign companies such as Facebook, LinkedIn, and Google when these services are utilized in India. Here’s a detailed explanation:
### **GST Under RCM on Services from Foreign Companies**
1. **Nature of Services:** - Services from foreign companies like Facebook, LinkedIn, and Google, such as advertising and digital marketing services, are considered imported services. These are services provided by a foreign supplier to a recipient in India.
2. **Reverse Charge Mechanism (RCM):** - **Applicability:** Under the GST Act, when a recipient in India receives services from a foreign supplier, the GST is to be paid under RCM. This means that the recipient (buyer) is responsible for paying GST, not the foreign supplier. - **GST Rate:** The GST rate for most digital services, including advertising services, is 18%.
3. **Ceiling Limit of ₹20 Lakh:** - **No Applicability:** The ceiling limit of ₹20 lakh (₹10 lakh for special category states) for GST registration does not apply to the import of services. This ceiling limit is relevant for determining whether a business needs to obtain GST registration based on its aggregate turnover. However, for imported services, GST must be paid regardless of this limit.
4. **GST Payment and Reporting:** - **Payment of GST:** The recipient needs to self-assess and pay the applicable GST on these imported services through the GST return form GSTR-3B. - **Reporting:** The GST paid under RCM should be reported in the GSTR-3B under the reverse charge section.
5. **Input Tax Credit (ITC):** - **Eligibility for ITC:** The recipient can claim Input Tax Credit (ITC) on the GST paid under RCM, provided the services are used in the course or furtherance of business. This helps in offsetting the GST liability against the output tax liability.
### **Example: Services from Google, Facebook, LinkedIn**
1. **For Businesses:** - If a business in India is purchasing advertising space from Google or Facebook, or subscribing to services from LinkedIn, the business must pay GST under RCM at 18%. This GST must be reported and paid through GSTR-3B. - The business can claim ITC for this GST, subject to the conditions laid out in the GST law.
2. **For Individuals:** - If an individual is purchasing services such as Google Ads for personal use, the individual is not required to pay GST under RCM. The requirement to pay GST under RCM primarily applies to registered businesses. However, if the individual is a registered person or a business entity using these services for business purposes, they would need to comply with RCM requirements.
### **Summary**
- **GST on Foreign Services:** GST on services provided by foreign companies like Facebook, LinkedIn, and Google is payable under RCM. - **Ceiling Limit:** The ₹20 lakh threshold does not apply to the import of services. - **RCM Compliance:** The recipient must self-assess, pay the GST under RCM, and report it in the GST returns. - **ITC Claim:** ITC can be claimed on the GST paid under RCM if the services are used for business purposes.
**Consultation with a Tax Advisor:** Given the complexity of GST compliance, especially with imported services, it is advisable to consult a tax advisor or GST practitioner to ensure proper compliance with the GST regulations.
CAclubindia
