GST on export of services

Test all export conditions

The export-of-services definition requires the supplier to be in India, the recipient and place of supply to be outside India, receipt in the permitted currency and satisfaction of the condition concerning establishments of the same person. Assess every element against the actual transaction.

Keep a short applicability note identifying the contract, service, recipient and relevant period. Do not infer the recipient solely from the bank remitter where a group company or payment intermediary pays the invoice.

Identify what is actually supplied

Read the scope, deliverables, responsibilities and pricing terms. Establish whether the Indian business supplies its own service or arranges a supply between other parties. CBIC Circular 159/15/2021 discusses the scope of intermediary services and the importance of the underlying arrangement.

For example, developing software on one’s own account and arranging a sale between two other businesses require different factual analyses. Calling both activities “consulting” on an invoice does not resolve the distinction. Preserve the contract and evidence of work performed.

Determine the place of supply

Identify the applicable place-of-supply provision for the service and period. Review special rules relevant to the activity rather than assuming that every service follows the customer’s billing address. Record the facts that support the chosen rule.

Where a customer has establishments in more than one country, establish which establishment receives the service under the applicable rules. Changes in scope or delivery can require a fresh assessment even where the customer name remains unchanged.

Check payment and group relationships

Reconcile invoices to receipts, including partial payments, deductions and payments by another party. The permitted currency condition includes Indian rupees where permitted by the Reserve Bank of India; retain the basis for using that treatment rather than assuming every rupee receipt qualifies.

Review whether the supplier and recipient are merely establishments of the same person or separate legal entities. The corporate relationship and the export-condition analysis should be documented; a common group name alone does not settle the issue.

Choose and maintain the compliance route

Assess registration obligations and any applicable exemption separately from export classification. For a registered exporter using the without-payment route, check LUT or bond requirements and retain the relevant filing record. Zero-rating does not mean all filing and evidence obligations disappear.

Reconcile export invoices, amendments and receipts to the appropriate return disclosures. If seeking a refund, review the category, eligible credit, calculation and documentation independently. An LUT does not prove that each invoice meets the export definition or guarantee a refund.

Maintain an invoice-level evidence file

• Contract and amendments identifying the parties and service.
• Recipient-location and place-of-supply assessment.
• Delivery or acceptance evidence appropriate to the work.
• Invoice, credit notes and return reporting references.
• Receipt records and explanation of any differences or permitted rupee payment.
• LUT or bond details where applicable, refund history and unresolved exceptions.

Review exceptions before repeating the treatment

Escalate unpaid invoices, changed recipients, work connected to Indian locations and arrangements involving facilitation of another supply. Preserve the actual dates and assess the relevant GST and foreign-exchange consequences separately.

Bring the contracts, invoices, delivery evidence, bank records, returns and prior advice to Kosha.Services. We can organise the classification facts and reconciliation file so the tax position is assessed against the real transaction rather than its invoice label.