Definition of Import of Service –
Section 2(11) of the IGST Act defines Import of Services as the supply of any service where –
(i) The supplier of service is located outside India.
(ii) The recipient of service is located in India and
(iii) The place of supply of service is in India.
Section 5(1) of the IGST Act provides that IGST Tax shall be levied on all inter-state supplies of goods or services or both, except on the supply of alcoholic liquor for human consumption.
Notification No. 10/2017 – Integrated Tax (Rate) dt.28.06.2017 covers same services as per Notification under CGST referred above. In addition, there is an entry as under –
|
Sr. |
Category of supply of services | Supplier of service |
Recipient of service |
|
1 |
Any service supplied by any person who is located in a non-taxable territory to any person other than non-taxable person. | Any person located in a nontaxable territory | Any person located in taxable territory other than non-taxable online recipient. |
In view of this provision, when services are imported by any registered person, he is liable to pay the tax under Reverse Charge.
Section 7(4) of the IGST Act provides that – Supply of services imported into the territory of India shall be treated to be a supply of services in the course of interstate trade or Commerce. In view of these provision, in case of import of services, the recipient has to pay IGST tax.
Checkpoints :
1. Verify all foreign exchange remittances pertaining to import of services.
2. Identify the payments which are liable for payment of tax under Reverse Charge.
3. Check the conversion rate which should be as per the generally accepted accounting principles – e.g. RBI rate for the date of time of supply.
4. Ensure that the tax liability under Reverse charge is discharged after payment.
5. Determine the Place of Supply of service correctly to ensure correct payment of tax.
6. Ensure that, if the services are received from Associated Enterprises, the tax is paid immediately after the date of entry in the books of account of the recipient or date of payment whichever is earlier.