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Will export of service be tax free in gst?

Anshu (Student) (96 Points)

28 June 2017

I would like to know if Export of service is Tax free or taxable in GST?

Thank you!

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5 Replies

Ravi Shah (2 Points)
Replied 28 June 2017

taxfree

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Anshu (Student) (96 Points)
Replied 28 June 2017

Thanks sir for your reply. What if the payment was sent in USD on paypal but received in INR in india?

Purnima (Professional) (289 Points)
Replied 28 June 2017

Export of service means the supply of any service,when

(a) the supplier of service is located in India,

(b) the recipient of service is located outside India,

(d) the payment for such service has been received by the supplier of service in convertible foreign exchange, and

(e) the supplier of service and recipient of service are not merely establishments of a distinct person;(same PAN).

Export of services are "zero rated supplies" i.e either claim refund of ITC when exported under bond or pay IGST and claim refund of taxes so paid.Now If any of the above five condition breaks then it wont be considered as export of services and consequently IGST would be leviable which shall be non-refundable.Hence if you receive payment in INR then the supply will not be treated as export of services and IGST would be applicable.

Anshu (Student) (96 Points)
Replied 28 June 2017

Originally posted by : Purnima
	Export of service means the supply of any service,when (a) the supplier of service is located in India, (b) the recipient of service is located outside India, (c) the place of supply of service is outside India, (d) the payment for such service has been received by the supplier of service in convertible foreign exchange, and (e) the supplier of service and recipient of service are not merely establishments of a distinct person;(same PAN). Export of services are "zero rated supplies" i.e either claim refund of ITC when exported under bond or pay IGST and claim refund of taxes so paid.Now If any of the above five condition breaks then it wont be considered as export of services and consequently IGST would be leviable which shall be non-refundable.Hence if you receive payment in INR then the supply will not be treated as export of services and IGST would be applicable.

Hi Madam,

It means, i will have to pay GST but that will be refunded. Please correct if i am wrong. Was INR payment from Foreign clients was treated as export of services (in Service tax)?

Thanks

Purnima (Professional) (289 Points)
Replied 28 June 2017

It is not necessary to pay GST and then claim refund-it is one of the option.There are two options available:

1)Export under bond and claim unutilized ITC.In this case you dont have to pay any gst.

2)Pay IGST at the applicable rate and claim refund of taxes so paid.

And yes,the condition to receive convertible foreign exchange is there in soon to be extinct service tax law as well i.e.receipt of INR against export is not counted as export of service under service tax law either.