GST provisions applicable in case of Import of services from outside India.
GST liability under RCM gets invoked in case of import of services otside india if certain basic conditions are met which are as follows.
1. Service supplied by Person located in Non taxable territory 2. Place of supply is in India. 3. Service reciever is not an NTOR 4. Services being imported against the consideration.
Lets understand each and every component carefully.
1. Legal Provisions.
A. Import of service
As per Section 2(11) of IGST Act, import of service means supply of service, where,
a) Supplier of service is located outside India
b) Recipient of Service is located in India
c) The place of supply of service is in India. (Refer Point D below)
B. Taxability of Import of Service under GST
includes the following: –
a) Import of service for a consideration whether or not in the course or furtherance of business [Section 7]
b) Import of service without consideration by a taxable person from a related person or from any of his establishments outside India, in the course or furtherance of business [ Schedule I to CGST Act].
C. Applicability of RCM
In case of Import of Service In terms of Notification no.10/2017-IT(R) dated 28.06.2017, one of the notified category on which GST is applicable under RCM is “any service supplied by any person who is located in a non-taxable territory to any person other than non-taxable online recipient”. IGST liability under RCM in case of Import of service has to be paid in cash/bank. GST ITC to the extent of IGST paid can be availed and utilized in the same month subject to ITC eligibility.
D. Place of Supply in case of Import of Service
When the service provider and recipient are located in India (Section 12 of IGST Act) The place of supply of services provided in relation to: – t
training and performance appraisal admission to cultural, educational or entertainment event organisation of cultural, educational or entertainment event
1. to a registered person shall be the location of such registered person;
2. to a person other than a registered person shall be the location where the services are actually performed/the event is actually held or such park or such other place is located.
When the location of service provider or location of recipient of services are outside India (Section 13 of IGST Act) The place of supply of services supplied by way of admission to or organization of cultural, educational or entertainment event and services ancillary to such admission or organization shall be the place where the event is actually held.
In case of import of service, if the nature of service does not fall under the one specified under Section 13(3) to 13(13) of IGST Act, then place of supply shall be the location of the recipient of service. Hence, IGST is to be discharged under RCM when the recipient is in India.
In a nutshell we can say Any person who is not an Non taxable online recipent recieves any service from outside india through any online or offline mode has to discharge its liability of GST under RCM. However such entity may get the the benifit of ITC depending upon the nature of output service being provided.
