Question

XYZ(India) is giving back office support to its Associate Company PQR(Singapore) (A separate legal entity) regarding all back-office services including administration, finance & accounting, logistics management, supply chain management, marketing management, product development and regulatory, bio-studies, and such other services as mutually agreed. Is xyz liable to pay GST on it?

Answer

The export of service is defined in section 2 of the IGST Act as follow

(6) 'export of services' means the supply of any service when,''
(i) the supplier of service is located in India;
(ii) the recipient of service is located outside India;
(iii) the place of supply of service is outside India;
(iv) the payment for such service has been received by the supplier of service in convertible foreign exchange; and
(v) the supplier of service and the recipient of service are not merely establishments of a distinct person in accordance with Explanation 1 in section 8;
Please note that the service will be treated as export only when all the conditions are fulfilled. The condition at (iii) is very important and should be checked service wise. All other conditions can be checked easily from the transaction.

We suggest you to please check Place of supply for every service separately as per Place of supply given in Section 13 of IGST. The same is reproduced hereinafter.

(1) The provisions of this section shall apply to determine the place of supply of services where the location of the supplier of services or the location of the recipient of services is outside India.

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(13) In order to prevent double taxation or non-taxation of the supply of a service, or for the uniform application of rules, the Government shall have the power to notify any description of services or circumstances in which the place of supply shall be the place of effective use and enjoyment of a service.

If some services are not falling in Place of supply outside India category then those services will not be treated as export.

(Reply dt.13/09/2018)