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How do I determine whether IT services provided by me constitute export of service

The supply of any service is considered an export of service, where the following conditions are met:
(1) the supplier of service is located in India;
(2) the recipient of service is located outside India;
(3) the place of supply of service is outside India;
(4) the payment for such service has been received by the supplier of
service in convertible foreign exchange; and
(5) the supplier of service and the recipient of service are not
merely establishments of a distinct person in accordance with
explanation 1 of section 8 of the IGST Act, 2017.

(FAQ 7: IT/ITES)

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Whether exports of software services attract GST

  1. Exports and supplies to SEZ units and SEZ developers are zero-rated in GST.
  2. Zero-rating effectively means that no tax is payable on exports but the exporter/supplier is entitled to the input tax credit on inputs/input services used in relation to exports.
  3. The exporters have two options for zero rating, which are as follows:
    (A) To pay integrated tax on supplies meant to be exported and get
    refund of tax so paid after the supply is exported.
    (B) To make export supplies under a bond or letter of undertaking
    and claim refund of taxes suffered on inputs and input services in
    relation to such exports.

( FAQ 6: IT/ITES)

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The supplier has sold machinery for hotel industry on 28-06-2017. The purchaser has received the invoice and machinery on 05-07-2017. Whether ITC of Duty / VAT paid ( under the existing law ) on machinery can be allowed to be claimed ?

No. Such credit is not admissible in case of machinery, being capital goods. As per Section 140 ( 5 ) of the CGST Act, 2017, credit of eligible duties and taxes in respect of only inputs / input services in transit during transition from Pre-GST to Post-GST is allowable. This is subject to the condition that the tax on such supply is paid under the existing law and the recipient records this receipt in his books of accounts within thirty days of the appointed day

(FAQ-7 Food Processing)

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The registered person ‘B’ receives small portions of software code from individuals which he then integrates and supply as a package to clients. These individuals are having small turnover of Rs 5 to 10 lakh, and therefore are not registered in GST. Whether there is any liability on ‘B’ in respect of services provided by such individuals?

  1. If the supplies are made by unregistered suppliers, GST is liable to be paid by the recipient, who is a registered person, undersection 9(4) of the CGST Act, 2017.
  2. Therefore, in this case ‘B’ is liable to pay GST on services provided by these individuals.
  3. ‘B’ can claim credit of this tax paid by him on reverse charge

( FAQ 4: IT/ITES)

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‘A’ is a dealer in Computers and Computer parts having turnover of Rs. 8 lakh in a year; does‘A’ have to register under GST

  1. Every supplier located in a State or Union territory, whose “aggregate turnover” in a financial year exceeds twenty lakh rupees, is liable to be registered under GST.
  2. This limit of turnover for a special category State is ten lakh rupees. ‘A’, whose aggregate turnover is only Rs. 8 lakh in a year, is therefore not liable to registration.

(FAQ 3: IT/ITES)

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What are the implications of recognising the development, design, programming, customisation, adaptation, upgradation, enhancement, and implementation of information technology software as a service

  1. The primary implication is that the place of supply rules applicable to services would apply in determining taxability of the supply of software services.
  2. The same would be applicable in situations of supply of services involving a temporary transfer or permitting the use or enjoyment of any intellectual property right.
  3. The other implication is that the supplier of software services would not
    be eligible for the composition scheme.

(FAQ 2: IT/ITES )

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Whether software is regarded as goods or services in GST

  1. In terms of Schedule II of the CGST Act 2017, development,design, programming, customisation, adaptation, upgradation,enhancement, implementation of information technology software and temporary transfer or permitting the use or enjoyment of any intellectual property right are treated as services.
  2. But, if a pre-developed or pre-designed software is supplied in any medium/storage (commonly bought off-the-shelf) or made available through the use of encryption keys, the same is treated as a supply of goods classifiable under heading 8523.

( FAQ 1: IT/ITES)