Applicability of gst and tds on usd payments

Applicability of gst and tds on usd payments

Hi,

I run a private limited company in the niche of digital marketing, and we have necessities to buy online subscriptions, typically in the $50-$200 per year range in a single transaction, from US/European companies. We buy these subscriptions using company's debit card at the moment. How do we calculate the GST rate? Is it based only on the USD-INR converted rate, or the INR that was actually charged to our debit card?

For example, we did a $59.99 on October 1st. Debit card was charged Rs 5,094.25 including the bank's forex charges, whereas the amount in INR if we do a simple USD-INR conversion with RBI rate for that day would be Rs 4,888.56. Which amount to consider for the 18% RCM GST, 5094.25 or 4888.56? If 5094.25, how to account it in books?

Is there any TDS implications for this, and if we skip TDS, would it be a serious default from our end? Are there any other complications or compliances regarding this?

Asked 2 years ago in GST

Any help, please?

Asked 2 years ago

Dear Sir,

Based on the facts provided in your query, please note that RCM is applicable in case of import of services and the value would be the amount actually charged from you net of any charges, i.e. INR 4888.56 in your example.

Please note that forex charges are levied by your bank as a % on the value of conversion done by you and the bank charges GST on the same.

That portion is a taxable supply in India and as such does not tantamount to import of services.

On the contrary you may seek a break up of such charges from your bank and take ITC of the GST charged by them.

In so far as the accounting aspect is concerned, on receiving the breakup from bank, you may then charge them to the respective head, i.e. 4888.56 to service expense, and the balance portion as bank charges and GST ITC.

In so far as TDS is concerned, the same is required to be deducted u/s 195 and Form 15CA & 15CB need to filed also.

In case of non compliance applicable interest is leviable.

Please connect in case of any further clarifications.

Thanks & Regards,

CA Aditya Dhanuka.

Aditya Dhanuka

CA, Kolkata

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Talk to Aditya Dhanuka

- Purchase of subscription from foreign companies is an import of service. Indian Co. is liable to pay RCM on such import of services and take ITC on payment basis. Value of taxable supply would be actual amount paid to foreign Co. (i.e. net of bank charges).

- Indian Co. is liable to deduct TDS u/s 195 and file Form 15CB/15CA before making each foreign remittance. Foreign service provider can take benefit of DTAA subject to providing TRC to Indian company. Don't make payment through Debit/Credit Card, submit Form 15CB,15CA, A2 and copy of invoice to your banker for making such foreign remittance.

- Non-deduction of TDS would attract interest and penalty

For detailed discussion you may opt for phone consultation

Vivek Kumar Arora

CA, Delhi

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Thank you! I

s the 15CB need to be filed even if the payment sent to that particular vendor is under 5L per financial year?

And, is the 5L limit calculated on the basis of the entire set of non-resident payments made by our company in that financial year, or vendor-wise?

Asked 2 years ago

- If aggregate amount of remittance during the financial year is less than Rs.5 lacs then there is no need to file Form 15CB.

- Limit of Rs.5 lacs is calculated on the basis of remittance to single vendor in the whole financial year.

Vivek Kumar Arora

CA, Delhi

Available Now

4950 Answers

1105 Consultations

Talk to Vivek Kumar Arora NOW!

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