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Published on:
March 21, 2023
By
Harshini

GST implication on App developers situated outside India

The Goods and Services Tax (GST) is a destination-based tax, which means that it is applicable on goods and services consumed in India. Therefore, if an app developer is situated outside India and provides services to customers in India, they may be liable to pay GST.

As per the GST law, any person providing taxable services in India is required to register for GST if their aggregate turnover exceeds a certain threshold. This threshold is INR 20 lakhs (INR 10 lakhs for Special Category States) for most businesses, but it may vary for certain categories of businesses.

If an app developer is required to register for GST, they would be required to charge GST on the services provided to customers in India. The rate of GST would depend on the type of service provided, and it can vary from 0% to 18%.

If the app developer is not required to register for GST, the customer receiving the service may be liable to pay GST under the reverse charge mechanism. This means that the customer would be required to pay the GST on behalf of the app developer and then claim the input tax credit.

It is important for app developers situated outside India to understand the GST implications of providing services to customers in India and comply with the GST law. They should evaluate their GST registration requirements and charge and collect GST as applicable to avoid any penalties or interest.

Section 2(17) of IGST Act, 2017 in relation with GST implication on App developers situated outside India

Section 2(17) of the IGST Act, 2017 defines the term "business vertical" as a distinguishable component of an enterprise that is engaged in the supply of individual goods or services or a group of related goods or services and is subject to risks and returns that are different from those of other business verticals.

In the context of GST implications on app developers situated outside India, the business vertical may be relevant for determining the place of supply of services. If the app developer has different business verticals that are engaged in providing services in different countries, the place of supply rules may vary for each business vertical.

For example, if an app developer has a business vertical in India that provides services to customers in India, the place of supply would be India, and the app developer may be liable to register for GST in India and charge GST on the services provided to customers in India. However, if the app developer has a business vertical in the US that provides services to customers in India, the place of supply would be the US, and the customer in India may be liable to pay GST under the reverse charge mechanism.

It is important for app developers situated outside India to understand the place of supply rules under the GST law and comply with the GST requirements in each country where they provide services. They should evaluate their GST registration requirements and charge and collect GST as applicable to avoid any penalties or interest.

Section 13(12) of IGST Act, 2017 in relation with GST implication on App developers situated outside India

Section 13(12) of the IGST Act, 2017 deals with the place of supply of online information and database access or retrieval services provided by a person located outside India to a person in India. In the context of GST implications on app developers situated outside India, this provision may be relevant for determining the place of supply of the services provided by the app developer to customers in India.

As per this provision, the place of supply of online information and database access or retrieval services provided by a person located outside India to a person in India is the location of the recipient of service. This means that if an app developer situated outside India provides online information and database access or retrieval services to customers in India, the place of supply would be India, and the app developer may be liable to register for GST in India and charge GST on the services provided to customers in India.

It is important for app developers situated outside India to understand the place of supply rules under the GST law and comply with the GST requirements in each country where they provide services. They should evaluate their GST registration requirements and charge and collect GST as applicable to avoid any penalties or interest.

Section 14 of IGST Act, 2017 in relation with GST implication on App developers situated outside India

Section 14 of the IGST Act, 2017 deals with the place of supply of services other than the services specified in section 13 of the IGST Act. In the context of GST implications on app developers situated outside India, this provision may be relevant for determining the place of supply of the services provided by the app developer to customers in India, if those services do not fall under the category of online information and database access or retrieval services specified under section 13 of the IGST Act.

As per section 14 of the IGST Act, the place of supply of services, other than the services specified in section 13 of the IGST Act, provided to a registered person shall be the location of such person. If the services are provided to an unregistered person, the place of supply would be the location of the recipient where the address on record exists or the location of the supplier of services.

Therefore, if an app developer situated outside India provides services to registered persons in India, the place of supply would be the location of the registered person. The app developer may be liable to register for GST in India and charge GST on the services provided to the registered person. If the services are provided to an unregistered person, the place of supply would be the location of the recipient where the address on record exists or the location of the supplier of services. In such a case, the app developer may not be required to register for GST in India, but the customer may be liable to pay GST under the reverse charge mechanism.

It is important for app developers situated outside India to understand the place of supply rules under the GST law and comply with the GST requirements in each country where they provide services. They should evaluate their GST registration requirements and charge and collect GST as applicable to avoid any penalties or interest.

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Updated on:
March 16, 2024