GST Applicable to Indian Company’s Foreign Client for Software Consulting Services

The Authority of Advance Ruling (AAR), Tamilnadu, has ruled that all the Indian firms providing Software Consulting and other services to any foreign client, will attract a GST at the rate of 18% Grab the information of revised GST slab rates on consumer products in India, Although GST council finalized the slab rates like 5%, 12%, 18% and 28%. The ruling was provided by the authority during the hearing of an application filed by Oracle ERP, which sought the ruling of the authority on whether GST is applicable to providing Software Consulting and other services to any foreign client or not.

The firm is GST registered View the complete amendment process in GST registration by step by step guide. Also, we have included how to amendment in core & non-core fields. Read Also and engaged in a business of providing consulting and other related services to Indian and overseas clients. The firm provided consulting services to an overseas firm named Doyen Systems and sought the ruling of AAR as to whether the services provided will be treated as an export of services or not. The main contract was signed between Doyen Systems and a US client and the applicant was contacted as a part of that contract in which the firm received fees for the consulting services after the applicant entered into an agreement with Doyen Systems.

The overseas client and the applicant mutually decided and agreed upon the fees for the services mutually, the value of which had no reference with the main contract. The applicant thought that they had provided the services, directly to Doyen Systems but received fees on behalf of the foreign client through Doyen Systems.

In the ruling statement, the authority said that there are two types of contracts present, on between the foreign client of Doyen Systems and the firm itself and another one between Doyen Systems and the applicant. The applicant is not a part of the first, main contract. The authority said that the firm is not an agent of the firm just and it is just in an ‘e-mail correspondence’ with the firm. Hence, the firm is not said to be ‘carrying on the business of supply of services’ which defines the status of an agent. The authority said that the firm is merely a ‘Consultant’ for Doyen Systems, but not an agent.

“The services provided by the applicant to Doyen Systems Pvt Ltd is a supply of services under the CGST/TNGST Act and the applicant is liable to pay relevant tax on such supply,” the Authority of Advance Ruling (AAR) Get to know about AAR (Authority for Advance Rulings) under GST India along with its mechanism. Also, we have described its objectives, powers, orders, etc said.

“The Government should contemplate and pass on a tax neutral status to services sector for all indirect exports, as the procedural law has matured and technology is stable after three years of implementation. With this tweaking, GST would move to phase–II of ‘Ease of Doing Business’, whereby the overall cost of capital in the IT services sector could be further rationalised,” Mohan added.