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Services Provided and Received Outside India--Taxability under GST

Jyoti Jain

GST, being a destination based tax is imposed on final consumption and tax is collected and deposited to the Government by registered entities in supply chain. In the context of transactions of overseas services transacted outside India, both service provider and service receiver are located in non-taxable territory, which inevitably raises a question about the taxability of such transactions under GST in India. The answer lies in the GST laws covering only genuine transactions in the GST net. The article discusses the relevant provisions with the help of an illustrative scenario.

1. Introduction

Let us take an illustration where a machinery of V Ltd. of London, UK develops a technical problem in India. V Ltd. of London deputes some engineers for repairing the machine at the site in Delhi. The supply is in Delhi. However, service provider (Engineers), as well as the service receiver (V Ltd.) are located in non-taxable territory, UK.

Issues

(i) Whether the service provided by Engineers of London to V Ltd. of London would attract GST in India?

(ii) If yes, who would be liable to pay GST in India?

2. Service Tax History

The charging section 66B of earlier service tax law was restricted to the services that were provided in taxable territory and either supplier or recipient is located in taxable territory.

Location of service provider and receiver

Liability to pay service tax is on

Both service provider and service receiver in taxable territory

Service provider under forward charge

Service provider in non-taxable territory and service receiver

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