Import of Services and Basic Customs Duty Quiz

Study Notes

GST on Imported Services

GST is applicable on import of services under reverse charge mechanism, where service recipient is liable to pay tax.
Conditions for import of services to be covered under GST: • Supplier of service is located outside India • Recipient of service is located in India • Place of supply of service is in India
Example: Mr. A pays fees for online coaching from a teacher in USA, and is liable to pay GST under Reverse Charge Mechanism, subject to threshold limit of Rs. 20 lakhs.

Activities Specified in Schedule I

Activities specified in Schedule I are made or agreed to be made without a consideration.
Examples include permanent transfer or disposal of business assets where input tax credit has been availed on such assets.

Apportionment of Credit and Blocked Credit (Sec. 17)

Sec. 17 deals with provisions relating to apportionment of credit and blocked credit.
Where goods or services are used partly for business and partly for other purposes, credit is restricted to input tax attributable to business purposes.
Where goods or services are used partly for taxable supplies and partly for exempt supplies, credit is restricted to input tax attributable to taxable supplies.

Advantages of GST

Advantages to citizens: • Simple tax system • Reduction in prices of goods and services • Transparency in taxation system • Increase in employment opportunities
Advantages to trade and industry: • Reduction in multiplicity of taxes • Migration of cascading/double taxation • More efficient neutralization of taxes • Simpler tax regime
Advantages to Governments: • Unified common national market • Boost to export/manufacturing activity • Improving the overall investment climate • Reduction in compliance costs

Important Definitions

Consideration (Sec. 2(31)): includes any payment made or to be made, whether in money or otherwise, in respect of, in response to, or for the inducement of, the supply of goods or services or both, but excludes any subsidy given by the Central Government or a State Government.

Description

Test your knowledge on the import of services for a consideration, regardless of whether it is in the course of furtherance of business. Learn about basic customs duty and the implications of GST on imported services under the reverse charge mechanism.