What Are Cross-Border Services?
⇒ These are supply of services between residents and non-residents of India — where:
⇒ The supplier or recipient is located outside India, and
⇒ The service is delivered across borders (electronically or otherwise)
Basic Rule: Place of Supply
GST liability depends on the Place of Supply (PoS) under Section 13 of the IGST Act, 2017.
| Scenario | GST Outcome |
|---|---|
|
PoS is outside India & supplier is in India |
Export of service – Zero-rated
|
|
PoS is in India & supplier is outside India |
Import of service – Taxable under RCM
|
|
Both parties outside India |
Not liable under Indian GST
|
Export of Services – GST Treatment
✅ Conditions for Export of Services (Section 2(6) of IGST Act):
⇒ Supplier of service is in India
⇒ Recipient is outside India
⇒ Place of supply is outside India
⇒ Payment is received in convertible foreign exchange or INR allowed by RBI
⇒ Supplier and recipient are not merely establishments of the same person
✅ If all conditions are met → Export of service is zero-rated
Benefits:
⇒ No GST on outward supply
⇒ Eligible for:
• Refund of unutilized ITC (if supplying under LUT without tax)
• Refund of IGST paid (if supplying with tax)
Import of Services – GST Treatment
When services are received in India from a person outside India:
⇒ It is treated as Import of Service
⇒ GST applies under Reverse Charge Mechanism (RCM)
⇒ The recipient in India pays IGST on the value of services
Common Import Examples:
| Service | GST under RCM |
|---|---|
|
Google Ads, Facebook Ads |
✅ Yes |
|
AWS, Microsoft Azure |
✅ Yes |
|
Consulting from overseas |
✅ Yes |
|
Foreign legal/accounting services |
✅ Yes |
Note:
Import by unregistered person (e.g., individual): RCM still applies in some B2C cases.
Key Compliance for Import of Services:
| Task | Description |
|---|---|
|
Pay IGST |
On value of imported service
|
|
File GSTR-3B |
Show IGST under RCM
|
|
Claim ITC |
Input tax credit available in same month if service used for business
|
|
Maintain invoice |
Even if not issued by supplier, you must self-invoice under RCM
|
Common Mistakes to Avoid:
⇒ Assuming export = exempt (it’s zero-rated, not exempt)
⇒ Forgetting RCM liability on foreign SaaS or digital services
⇒ Not filing Letter of Undertaking (LUT) before zero-rated export
⇒ Missing refund application timelines (2 years from relevant date)
Special Cases:
| Case | GST Implication |
|---|---|
|
Intermediary services |
Place of supply = India → Taxable, even if recipient is abroad
|
|
Services to own foreign branch/HO |
Not export (same legal entity) → Taxable
|
|
BPO/KPO servicing foreign client |
Likely export (if Place of Supply is outside India)
|