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Foreign consultant fee

Others 710 views 2 replies

kamatchi sundaram

accounts

122 Points Posted on 28 February 2020

sir,

good morning...

we have appointed a foreign consultant from France for our business research on contract basis.

we have to pay some amount as monthly charges and we have meet all his trip expenses in this regard.

I believe that we have to pay gst at 18% under reverse charge.

can you please suggest is there any option to escape from this liability???

because we are from agriculture industry our final products are exempt from GST, every input GST is our cost of product.

kindly suggest...

Replies (2)

CA Akshay Hiregange

Partner - Audit & Assistance

4825 Points Posted on 28 February 2020

If the foreign consultants services are in the nature of intermediary services, then the place of supply as per Section 13 would be outside India. Therefore, the transaction would not be liable as an "Import of Service" under Section 2(11) of CGST Act. Thus no RCM liability.

Although, in this case consultancy services may be liable as it may not be intermediary activity. Possible way to reduce RCM costs here is to comply with pure agency conditions (refer Rule 33 of CGST Rules) towards reimbursements expenses. Then RCM to be paid only towards consultancy fee.