Export of goods

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

22 January 2016

Case: Company A(Indian Subsy) want to give manufacturing Service to Company B (USA parent co.)

Questions :

1. As I say manufacturing service to Company B, Can we take this as service or it will considered as manufacturing only.

2. Which type of registration I have to take.

3. Can I get SSI exemption as our manufacturing will not be more than 400 lakh. If yes then Y it will not covered under branded goods

3.Whether we have to sale our product to Company B or there is any other way to send this product to USA also.

4. We have T.P. agreement with Company B so shall I modify it add the clause that we will sale goods to Company B or shall I say manufacturing service to Company B

5.We don't have any service tax registration or now we will to take that ? If yes then Y ?

Thanks,

CA Chandra Kishore Bajpai

CA Chandra Kishore Bajpai (Expert)
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13 February 2016 In your query concrete reply cannot be given as it need more study of the facts of the agreement and facts.

Querist : Anonymous

Querist : Anonymous (Querist)

14 February 2016 Please let me know what more details are needed

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Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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24 July 2024 Based on the details provided, here are the responses to your questions:

1. **Nature of Service**: If Company A (Indian subsidiary) is providing manufacturing services to Company B (USA parent), it would typically be considered a service under GST regulations. The key distinction here is that Company A is providing a service of manufacturing rather than selling goods. This falls under the category of "Supply of Service" as per GST.

2. **Registration Requirement**: Since you are providing manufacturing services and the turnover is expected to be below 400 lakh (4 crore), you may consider registering under GST as a regular taxpayer. You can opt for GST registration voluntarily even if your turnover is below the threshold limit for mandatory registration. This registration will allow you to avail input tax credit (ITC) on your purchases and comply with GST regulations.

3. **SSI Exemption**: Under GST, the SSI exemption limit (where businesses with aggregate turnover up to 40 lakhs are exempt from GST) does not apply. However, if your turnover is below 1.5 crore, you may opt for the Composition Scheme under GST, which has different rules for manufacturers. Products sent directly to USA may be subject to export procedures and documentation.

4. **Sales to Company B**: Depending on the terms of your T.P. agreement, you can specify that you will provide manufacturing services to Company B. The agreement should clearly outline the nature of the service provided, terms of payment, delivery obligations, and any other relevant clauses related to the manufacturing process.

5. **Service Tax Registration (GST Registration)**: Yes, you need to obtain GST registration if your aggregate turnover exceeds the threshold limit (currently 20 lakhs, 10 lakhs for special category states) or if you voluntarily opt for registration. This registration is necessary to comply with GST laws, issue GST-compliant invoices, and claim input tax credits on your purchases.

In summary, for providing manufacturing services to Company B (USA parent), Company A (Indian subsidiary) should consider registering under GST, specifying the nature of the service in the T.P. agreement, and following export procedures if goods are sent directly to the USA. It's advisable to consult with a GST practitioner or tax expert to ensure proper compliance with GST regulations and to optimize your tax benefits.