As expected, GST influenced almost every major and minor business in India. In the same sequence, GST has an impact on IT and ITES industry too. This is the industry which is the source of various IT revolution and development. So by this post, we discuss some of the faqs on it and ites under GST.
Q. What is the GST tax rate on IT services? Ans. 18% GST rate is applicable on IT services Q. Do software export services attract GST? Ans. Exports and supplies to SEZ units and SEZ developers are zero-rated in GST. The zero rating effectively means that there is no tax on exports, but the input/input services used in connection with the exporter/supplier exports are input tax credits. Exporters have two options for zero rating, which are as follows: (1) To pay the integrated tax on supply for supply and to get a refund of tax paid after export of supply. (2) To supply the export under the letter of a bond or undertaking and to claim the return of taxes on input and input services in relation to such exports. Read Also: Faqs on RCM (Reverse Charge Mechanism) Under GST Q. How to explain the supply of IT / ITES services? Ans. The location of supply of IT / ITES services is the location of the recipient in terms of section 12 and 13 of the IGST Act, 2017. However, if the recipient is not registered and the address is not available on the supplier’s record, then the supply will be the place of a supplier. Q. How to determine the recipient’s location? Ans. The location of the service recipient is defined in section 2 (14) of the IGST Act. The recipients of the services are believed to be located outside of India, if they are outside the place of their business, where they are served, or if they do not have a business place, then their general location is outside India. Q. ‘A’ is the dealer of computer and computer parts, which have a turnover of 8 lakhs annually; Should A ‘be registered under GST? Ans. Every supplier located in a state or federal area, whose financial year “total business” is more than Rs 20 lakh, it must be registered under GST. This limit of business for a special category state is 10 lakh rupees. ‘A’, whose total turnover is 8 lakh per annum, is therefore not responsible for registration. Q. The registered person ‘B’ receives small parts of the software code from those individuals which he integrates and supplies to customers as a package. These individuals have a small business of 5 to 10 lakh rupees, and hence are not registered in GST. Is there any liability on ‘B’ in relation to the services provided by such persons? Ans. If supplies by unregistered suppliers, then the GST can be paid by the recipient, who is a registered person, Under Section 9 (4) of the CGST Act, 2017. Therefore, in this case ‘B’ is responsible for paying GST, on the services provided by these individuals. ‘B’ can claim the credit of this tax paid by them on a reverse charge. Q. Is GST software also considered as goods or services? Ans. In the context of Schedule 2 of the CGST Act 2017, permission to use, design, programming, optimization, optimization, upgradation, enhancement, implementation of information technology software and temporary transfer or use of any intellectual property rights are considered as services. Q. We are a registered private limited company in India and also have a 100% owned subsidiary in the USA (management of both companies is the same). We build software/websites for US/foreign clients via our US subsidiary. The Pvt Ltd. Company (Parent firm) then invoices our own subsidiary for the work done after including transfer pricing. The money is received in USD from our US Subsidiary. Will this transaction incur GST or will it be considered export of service? Ans. It will be Considered as Export of Services. Read more: Faqs on IT and ITES Industry
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