GST (Goods and Services Tax) on international transactions in India is determined by the nature of the transaction:-
- Export of Goods and Services: GST is not levied on the export of goods or services from India. Exports are treated as ‘zero-rated supplies’ under GST. This means exporters can claim a refund for the input tax credit on goods or services exported.
- Import of Goods: GST is applicable on goods imported into India. The importer is required to pay Integrated Goods and Services Tax (IGST) on the value of the imported goods. IGST is roughly equal to the sum of the Central GST (CGST) and State GST (SGST) or Union Territory GST (UTGST) that would have been charged on a domestic product.
- Import of Services: GST is also levied on the import of services into India. The recipient of the services in India is required to pay GST under the Reverse Charge Mechanism (RCM), where the recipient is liable to pay GST instead of the foreign supplier.
- Cross Border Supply of Online Information and Database Access or Retrieval Services (OIDAR): GST is applicable on OIDAR services provided by foreign service providers to non-taxable online recipients (consumers) in India. The foreign service providers are required to register and pay GST in India for these services.
- Special Economic Zones (SEZ): Supply of goods or services to SEZ units or SEZ developers are treated as zero-rated supplies, similar to exports.
In summary, international transactions involving goods and services are subject to specific GST regulations in India, with exports generally being zero-rated and imports attracting IGST. For certain services, especially digital ones provided by foreign entities to Indian consumers, GST is applicable and must be complied with.
