Cross-border transactions are intricate and complex in terms of indirect tax consequences in India. It is important to understand and analyse the applicability of a goods and services tax (GST) on cross-border transactions. This is an analysis of the GST implications of some pertinent situations and advance rulings.
Overseas trade between local companies. Supply of goods from a place outside India to another place outside India without them entering the country is not taxable under the Goods and Services Tax Act, 2017, irrespective of the fact that the supplier and/or the recipient is located in India. Clause 7 of schedule III of the act declares that such merchanting trade transactions are not considered the supply of goods or services. However, this is not applicable in the case of supply of services. Where services are provided with a supply of goods, GST is levied on the supply of services from a place outside India to another place outside India. Where transport, marketing or auxiliary business services are provided with a supply of goods, they attract GST.
Senior Partner
India Law Offices
Services by a provider abroad. Where technical and advisory services are provided by a non-resident outside India to someone located there, such services are generally subject to GST, and the responsibility for payment will be on the recipient. It is an import of services. However, this depends on the nature of the service being provided. If a foreign company provides technical and advisory services in relation to immovable property outside India, there will be no GST implications for either party, as the place of supply is outside India. Intermediary services are treated similarly. A non-resident having permanent establishment in India and providing technical services there is required to register and account for GST.
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Rajesh Kumar is a senior partner and Abhishek Hans is a partner at India Law Offices.
India Law Offices
D-19 (GF) & D-31, South Extension – 1
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India
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