The Central Board of Indirect Taxes and Customs (CBIC) on October 27, 2023, issued a circular regarding the clarification relating to the export of services–sub-clause(iv) of Section 2 (6) of the IGST Act 2017.
The following has been stated: -
•Various representations have been received requesting clarification regarding the admissibility of export remittances received in the Special INR Vostro account, as permitted by RBI, for the purpose of consideration of supply of services to qualify as export of services as per the provisions of clause (6) of section 2 of the Integrated Goods & Services Tax Act, 2017.
•The issue has been examined and to ensure uniformity in the implementation of the provisions of law across the field formations, the Board, in the exercise of its powers conferred by section 168 (1) of the Central Goods & Services Tax Act, 2017 (hereinafter referred to as the ‘CGST Act”), hereby clarifies the issue as under –
Relevant legal provisions:
Export of services has been defined under clause (6) of section 2 of the IGST Act. As per the said definition, any supply of services needs to fulfill five conditions for it to qualify as an export of services. Clause (6) of section 2 of the IGST Act is reproduced below for reference: “(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 inconvertible foreign exchange or in Indian rupees wherever permitted by the Reserve Bank of India; 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.
•One of the conditions mentioned in sub-clause(iv) of Section 2(6) of the IGST Act is that the payment for such service has been received by the supplier of service in convertible foreign exchange or in Indian rupees wherever permitted by the Reserve Bank of India.
The detailed circular is attached in the document given below.
[Circular No. 202/14/2023-GST]
