In simple terms IMPORT OF SERVICES means supply of services for a consideration by a person located outside India to a person located in India. In India, import of services is treated as interstate supply attracting IGST and in case of import, a person who is located in India (that is the importer or one who acquires services) is liable to pay IGST. And this is called Reverse charge. Therefore in case of import of services, the recipient who is a registered taxpayer under gst has to pay IGST under the reverse charge mechanism of GST laws.
As per the provisions of IGST act, if the import of free services which is without consideration, then in those cases it will not be considered under the definition of supply. For example; Import of services from Facebook or Google without any consideration will not be considered as supply of service.
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In a nutshell, an import of services will be considered for its applicability for GST if:
- The supplier of services is located abroad/outside India.
- The recipient is in India.
- The supply of service is located in India.
- The element of consideration between the supplier & receiver.
Taxability of Import of Service under GST includes the following also:
- Import of services for consideration whether or not in the course or furtherance of your business
- Import of service without consideration by a taxable person from a related person or from any of his business activities outside India, in the course or furtherance of business.
Related Blog: WHAT IS THE GST REGISTRATION PROCEDURE
However checking place of supply of service is important, especially in case of some event based services or commission based service place of supply could be outside India. It is better to check with professionals through platforms such as ca services online.
Input Tax Credit: The service recipient can avail Input Tax Credit (ITC) that is paid under reverse charge on goods and services. Provided the fulfilment of condition that the goods and services are used or will be used for business or furtherance of business
For anything related to GST, it is better to go to a tax advisor such as Chartered Accountants in order to protect your business from long term losses on wrong application or non-application of gst laws in your business. From tax rates to filings to audit one has to be 100% compliant under gst.
Want to know gst laws of reverse charge mechanism on import of goods? Click here: GST Registration
Is reverse charge mechanism applicable on advance payment too?
Yes it is APPLICABLE.
What is the rate of taxes in gst for import of services (RCM)?
It will be same as that of normal domestic rate which are prescribed in GST laws
Who pays tax under RCM in case of e-commerce service providers such as urban clap?
Registered e-commerce operator shall pay gst to Government in such cases not the actual providers such as beautician, electrician etc
What is the charge of CA consultancy for GST laws applicability?
Ca services online provides free consultancy on gst law applicability and does your gst filings at a cost efficient price.
What are the list of services liable to pay GST on reverse charge?
Here is the link to list as published by Ministry of finance
Click here: Resources