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What conditions must be met for a supply to be treated as export of services under GST?

GradeHunt_TeamGradeHunt Team · · CA Final

For CA Final IDT I'm reading place of supply and zero rated supply. My doubt: if an Indian firm gets paid in dollars, is it automatically export of services? Which conditions should I check in a question, and what happens to GST if it qualifies?
export of servicesigst actzero rated supplyplace of supplylut

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No. Payment in foreign currency is only one of five conditions. Section 2(6) of the IGST Act treats a supply as export of services only when ALL of these are met: 1. The supplier is located in India. 2. The recipient is located outside India. 3. The place of supply is outside India. 4. The supplier receives payment in convertible foreign exchange, or in Indian rupees wherever permitted by the RBI. 5. The supplier and recipient are not merely establishments of a distinct person under Explanation 1 to Section 8. Condition 3 is where most questions are set. You must work out the place of supply under Section 13 of the IGST Act (supplier or recipient outside India), not just look at where the client sits. Examples: - A Pune firm builds an app for a client in London and is paid in pounds. The general rule in Section 13(2) puts the place of supply at the recipient's location, London. All five conditions hold, so it is export of services. - The same firm organises a conference in Goa for a US company and is paid in dollars. For event services, Section 13(5) puts the place of supply where the event is held, which is India. Condition 3 fails, so it is not an export, even with dollar payment. - The Pune firm provides services to its own branch in London. The two are establishments of a distinct person, so condition 5 fails. What happens when it qualifies: Export of services is a zero rated supply under Section 16 of the IGST Act. The exporter can either: (a) supply under a Letter of Undertaking (LUT) without paying IGST and claim a refund of unutilised input tax credit, or (b) pay IGST and claim a refund of that IGST, subject to the conditions and restrictions notified under Section 16. In an exam answer, list the five conditions, test each against the facts in one line, and only then state whether the supply is zero rated.
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