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  • Category: Government

    Are foreign companies exempted from being charged GST?


    Wants to know the applicability of GST for foreign companies. Here are the inputs from our ISC experts.

    We're having a collaboration with a website and aside from the fee, we were going to be charged 18% GST which is really a big turn off for us. I asked the reason why we'll be charged and we're not even from India, they replied with this > SAC code - 998361.

    Now can someone clarify if we're under the scope of this law.

    Thanks!
  • #146666
    GST is destination-based taxation, It is also called consumption-based. For foreign companies, this has a profound impact. These organizations are directly subject to GST, specifically Integrated GST (IGST). IGST governs the taxation of all goods and services that cross India state borders, including international shipments. As per IGST rules, foreign companies are also liable to pay GST.
    drrao
    always confident

  • #146697
    GST levied on consumption of goods and services is an indirect tax that is paid by the service provider but borne by the consumer in the end when he or she completes the purchase. All foreign companies come under the Integrated GST that governs all taxes related to services across borders.

    Foreign companies who have no residence in India or a fixed place of business but supply goods or services should obtain GST registration which is mandatory. Under Section 24 of the CGST Act.

    After registration, the company is required to file GSTR-5 form via the GST common portal. Even companies that deal with online information-OIDAR - online information and database access or retrieval need to submit forms GSTR-5A

    In GST you have either HSN code or SAC code. HSN is Harmonised system of Nomenclature for the supply of Goods, SAC is services accounting code of the supply of services. Your line of business is providing a service and not goods, hence Your code SAC code - 998361, it means a Services Accounting Code specifically designed under the GST classification to maintain uniformity. The numbers are designed to minimise misinterpretation, your code comes under
    Section number:8
    Service type: Business and production services
    Heading number:9983
    Group Number:99836
    Service detail: Advertising service and provision of space or time for advertising

    There is a still confusion regarding each individual services like call center etc who have offices overseas but conduct business in India. So please contact the relevant department once.
    http://www.cbec.gov.in/resources//htdocs-cbec/gst/IGST_rules_15112017.pdf - This is about IGST with examples
    http://gstcouncil.gov.in/sites/default/files/CGST.pdf - AN overview of CGST
    http://www.cbec.gov.in/resources//htdocs-cbec/gst/eflier-IGST-23062017.pdf

  • #146725
    Let's simplify.

    Foreign companies if have presence (as in office and bank accounts) then they are subjected to the taxes. And they are going to get charged under GST. Any person working for such companies is also going to pay and ask for the GST number.

    If foreign company has the presence outside india but does database and supply chain business with local business in India for which it requires the bank presence, those also come under GST.

    If foreign company does business with india, has no bank presence, then there is no GST applied. They can pay directly or can use the escorw to pay the indian workers, business and the SMEs.


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