Hello, I am running software development company in maharashtra, pune. I have my client in Dubai, we are working on their software project and they pay us monthly $700. Now I have GST number registered, So demanded them 18% GST extra on the amount $700. But they are outsourcing their work to many Indian companies, none of the companies are charging them Service Tax/ GST , and they consulted to Indian CA regarding this. They say that GST isn't applicable for IT outsourcing to India and they will not pay GST or any other tax. They advised me to consult this , need help what needs to be done here.
GST is applicable.
But since exports are treated as zero rated supplies, you can either
Export without payment of IGST under Bond/ Letter of Undertaking
Or
Export with payment of IGST claiming input tax credits and then claiming back the refund of IGST paid.
Hi,
Since, you are exporting your services, these services are zero rated.
Hence, GST is not required to be charged. You can export service understand letter of undertaking/ bond. Otherwise, you have to pay IGST and get the refund of it.
Please feel free to call/ revert in case you need more clarity.
Thanks and regards
Abhishek Dugar
CA CS B.Com
The IT outsourcing from outside india to an indian whether he is individual or company comes under the export of services.
That means you are exporting ur services from india to another country.
As per finance act 1994, for Export of IT services from india does not attract service tax .
Also u can claim the refund of input credit of service tax paid on any service taken by you for purpose of export of service.
For example , If u have taken rent services and Service tax charged on it and u have paid all the amount to vendor then u can claim refund of service tax paid on that service taken
What is Bond/ Letter of Undertaking? Is it in some standard format or It's just a letter signed by the customer?
Yeah there is a specific format in which you have to apply to your jurisdicional officer.
Export bonds and letter of undertaking can be submitted to the jurisdictional Deputy Commissioner or Assistant Commissioner of the concerned jurisdiction. However, once FORM RFD-11 is made live on the GST Portal, the document can be submitted online.
Refer the below link for the format
Bond or LUT is a document through which an exporter satisfies the department that the exporter shall obey all the rules and regulations relating to export. The bond or LUT is filed in the prescribed format of GST RFD – 11. Many other documents are also required.
Hello,
An application for Bond/ LUT has to be made to your jurisdictional officer in Pune. you can either approach him in person with all the requisite documents or hire a local professional who will do it for you.
Feel free to get back if you need any reference in pune.
Trust this clarifies your query.
Thanking You.
Regards,
Rohit R Sharma
BCOM, ACA, LLB-GEN, CERT. FAFP
Hello,
A Bond or LUT is an application made to your jurisdictional officer to grant you a certificate against which you can make duty free exports.
A number of documents are to be attached with it. You may either hire a professional or visit the department yourself to get an understanding of the documents required.
Regards,
Keerthiga Padmanabhan
M.Com., CA, LL.B
