Is GST applicable on the export of services?

India has been a significant exporter to other countries. As a result of the new rules & regulations in India that support exports, our country’s economy and GDP are expanding more quickly. Additionally, after acquiring the required registrations and licenses, you can take advantage of a number of government perks if you wish to launch an export business in India.

GST, Goods & Service Tax, must be paid for both goods and services. Export essentially means trading or supplying goods and services outside the domestic territory of a country.

Are you a professional offering service outside India?

If yes, know about the taxation and legal aspect of the export of services.

So, what is the export of services under GST?

As per GST, the export of services is when:

  • The supplier of the service is located in India
  • The recipient of the service is located outside of India
  • Supplier of service receives the payment in convertible foreign currency or Indian Currency

Treatment of export under GST

Under GST, the export of goods & services is treated as:

  • Inter-State Supply, hence IGST is charged on export
  • Zero-Rated Supply. This means export does not fall in the exempt category. Zero-Rated Supply also applies to supply export services to Special Economic Zones. However, ITC is available in such a supply. Therefore, there happens a GST refund in zero-rated supply.

Documents necessary for exporters of the services to claim a GST refund:

i. A cover Letter

ii. Bank Realization Certificates or Foreign Inward Remittance Certificates

iii. Export Invoices

iv. Form GSTR 3B and GSTR 1

v. Application for Refund in the Form GST RFD 01

vi. Canceled cheque

vii. If GST refunds claims exceed ₹2 lakhs per quarter a certificate from a Chartered Accountant/Cost Accountant.

viii. Other Documents as per Government Requirements

All the above-mentioned documents are all mandatory, a GST refund cannot be claimed without these documents.

Furthermore, taxpayers must furnish Letter of Undertaking to export services without paying IGST.

So, GST Registration is mandatory for the export of services in India. According to the government, export services are interstate taxable supplies and must have GST Registration.