An Indian software company provides services to clients in the UAE and US. How does GST apply?
What the interviewer wants to hear
- Conditions for export of services
- Zero-rated supply
- Option to export under LUT without IGST or pay IGST and claim refund
- Refund of unutilised ITC
- Documentation such as FIRC or bank realisation evidence
Model answer
First I check whether these services qualify as export of services. The supplier must be in India, the recipient outside India, the place of supply outside India, payment received in convertible foreign exchange or in rupees where RBI permits, and the two parties must not be merely establishments of the same person. For software development services to unrelated foreign clients, the place of supply is usually the recipient’s location, so the conditions are often met. If they are, the supply is zero-rated. The company can file a Letter of Undertaking and export without paying IGST, then claim a refund of unutilised input tax credit, or pay IGST and claim a refund of it. I would make sure invoices show the export details, and keep bank realisation evidence such as FIRCs or e-BRCs. I would also review contracts for any services where the place of supply rule differs, such as services on goods in India.
Can you answer it under time pressure?
Take a timed medium round and get scored on every answer.
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