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Case Study on GST on Services to Own Establishment Based Outside India

A Ltd. located in Gurugram, India providing back hand support services to its branch office situated in USA. He is charging $10,000 per month to his branch office & also get timely payment in convertible foreign exchange from his branch in USA.

Query of Mr. A:

1. Whether this service would be considered as Export of services?


According to Section 2(6) of IGST Act, “Export of services” means the supply of any service when all of below conditions are fulfilled:

i. The supplier of service is located in India;
ii. The recipient of service is located outside India;
iii. The place of supply of service is outside India;
iv. The payment for such service has been received by the supplier of service in convertible foreign exchange;
v. The supplier of service and the recipient of service are not merely establishments of a distinct person

According to Section 25(5) CGST Act, where a person who has obtained or is required to obtain registration in a State or Union territory in respect of an establishment, has an establishment in another State or Union territory, then such establishments shall be treated as establishments of distinct persons for the purposes of this Act.

To Conclude:

We can conclude that the branch office situated at USA is include in the definition of distinct person. So as per Section 2(6) it is not an export of service as all of the conditions are not satisfied. Therefore, it is not an export of service as per section 2(6) of IGST Act.

(Disclaimer: This content is meant for our clients or professional friends only for stimulating discussion on the subject matter not to frame any commercial opinion. All efforts are made to compile correctly with no guarantee of extreme accuracy)

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