GST Update - Clarification on place of supply of data hosting services and procedure for resolving conflict under Rule 96(10) pursuant to 54th GST council meeting | nasscom | The Official Community of Indian IT Industry

Terms of use

Terms of Use

The use of this site and the content contained therein is governed by the Terms of Use. When you use this site you acknowledge that you have read the Terms of Use and that you accept and will be bound by the terms hereof and such terms as may be modified from time to time.

All text, graphics, audio, design and other works on the site are the copyrighted works of nasscom unless otherwise indicated. All rights reserved.
Content on the site is for personal use only and may be downloaded provided the material is kept intact and there is no violation of the copyrights, trademarks, and other proprietary rights. Any alteration of the material or use of the material contained in the site for any other purpose is a violation of the copyright of nasscom and / or its affiliates or associates or of its third-party information providers. This material cannot be copied, reproduced, republished, uploaded, posted, transmitted or distributed in any way for non-personal use without obtaining the prior permission from nasscom.
The nasscom Members login is for the reference of only registered nasscom Member Companies.
nasscom reserves the right to modify the terms of use of any service without any liability. nasscom reserves the right to take all measures necessary to prevent access to any service or termination of service if the terms of use are not complied with or are contravened or there is any violation of copyright, trademark or other proprietary right.
From time to time nasscom may supplement these terms of use with additional terms pertaining to specific content (additional terms). Such additional terms are hereby incorporated by reference into these Terms of Use.

Disclaimer

The Company information provided on the nasscom web site is as per data collected by companies. nasscom is not liable on the authenticity of such data.
nasscom has exercised due diligence in checking the correctness and authenticity of the information contained in the site, but nasscom or any of its affiliates or associates or employees shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this site. The information from or through this site is provided "as is" and all warranties express or implied of any kind, regarding any matter pertaining to any service or channel, including without limitation the implied warranties of merchantability, fitness for a particular purpose, and non-infringement are disclaimed. nasscom and its affiliates and associates shall not be liable, at any time, for any failure of performance, error, omission, interruption, deletion, defect, delay in operation or transmission, computer virus, communications line failure, theft or destruction or unauthorised access to, alteration of, or use of information contained on the site. No representations, warranties or guarantees whatsoever are made as to the accuracy, adequacy, reliability, completeness, suitability or applicability of the information to a particular situation.
nasscom or its affiliates or associates or its employees do not provide any judgments or warranty in respect of the authenticity or correctness of the content of other services or sites to which links are provided. A link to another service or site is not an endorsement of any products or services on such site or the site.
The content provided is for information purposes alone and does not substitute for specific advice whether investment, legal, taxation or otherwise. nasscom disclaims all liability for damages caused by use of content on the site.
All responsibility and liability for any damages caused by downloading of any data is disclaimed.
nasscom reserves the right to modify, suspend / cancel, or discontinue any or all sections, or service at any time without notice.

For any grievances under the Information Technology Act 2000, please get in touch with Grievance Officer, Mr. Anirban Mandal at data-query@nasscom.in.

New

See all

No notification found.

GST Update - Clarification on place of supply of data hosting services and procedure for resolving conflict under Rule 96(10) pursuant to 54th GST council meeting

Tejasvi

@tejasvi

September 30, 2024

Public Policy

103

The recent announcements by the GST Council mark a significant step forward in enhancing EoDB for the IT-BPM and e-commerce sectors in India. The announcement to issue a circular to clarify place of supply for data hosting services provided by service providers located in India to cloud computing service providers located outside India and rolling out of B2C e-invoicing on voluntary basis are welcome move. Nasscom had been advocating on these issues for more than a year, highlighting the challenges faced by companies. We are encouraged to see our efforts culminate into positive clarifications for the industry.

Key wins:

Clarification on place of supply for data hosting services provided to foreign cloud computing service providers (Circular No. 232/24/2024-GST dated 10 September 2024): Ground-level authorities were incorrectly classifying these services as intermediary services, subjecting them to 18% GST. This was resulting in unnecessary blockage of working capital. The Council has issued a Circular to clarify that data hosting services provided to foreign cloud computing service providers are not intermediary and will qualify as export of services. The circular is thorough and addresses all interpretational issues faced by exporters in this domain. Notably, the text of the Circular is taken verbatim from the representation submitted by Nasscom to the Ministry of Finance.

The circular clarifies the following aspects:

Data hosting service providers are not considered as Intermediary services under S. 2(13) of IGST Act, since they do not facilitate supply of services between cloud computing service provider and its end users. They provide services on a principal-to-principal basis and are not brokers or agents.
Data hosting services are not considered to be in relation of goods made available by the cloud computing service provider, as the service provider manages its own infrastructure. Therefore, S. 13(3)(a) of IGST Act, which deals with place of supply for services related to goods made available, does not apply. Importantly, it clarifies that this is the case even if some of the hardware is made available by the overseas cloud computing service recipient.
Data hosting services are not provided directly in relation to immovable property. The services involve the provision of a comprehensive solution for data hosting, including infrastructure management, rather than being directly related to immovable property. Thus, Section 13(4) of the IGST Act is not applicable.
Since the specific provisions in Sections 13(3) to 13(13) of IGST Act do not apply, the place of supply for data hosting services should be determined under the default provision of Section 13(2) of the IGST Act.

This clarification is in line with Meity’s focus on the need to create data centre infrastructure within India to support data localisation and protection of digital sovereignty with a vision to make India a Global Data Centre hub.

Introduction of B2C e-invoicing-

E-invoice is currently applicable to supplies made to B2B and exports transactions. This expansion to B2C transactions, albeit voluntary, is a progressive step. Nasscom had been advocating on this issue for more than a year. This is specifically relevant for ecommerce sector where most of the supplies are to B2C customers the volume and frequency of deliveries are quite large. The concept of paperless invoicing has already been adopted in various countries (including EU, Brazil, Canada, Singapore) which do not require printing of invoices. This will help in reducing cost of paper, reduced damage to environment and plugging revenue leakages.

Clarification regarding regularisation of refund of IGST availed in contravention of rule 96(10) of CGST Rules, 2017, in cases where the exporters had imported certain inputs without payment of integrated taxes and compensation cess - regarding (Circular No. 233/27/2024-GST dated 10 September 2024)

To recap, Rule 96(1) bars the refund of IGST on exported goods if certain concessional/exemption notifications were availed on inputs imported or procured domestically.
In 2020, a retrospective explanation was added stating that if a registered person has paid IGST and compensation cess on inputs and availed only Basic Customs Duty (BCD) exemption, the benefits of notifications should not be considered as availed for the purpose of sub-rule (10).
However, there was ambiguity in respect of past cases, where IGST benefit had already been availed.
The Circular now provides that exporters who have paid IGST and compensation cess should get their Bill of Entry reassessed through Customs authorities.
Refund of IGST on exports will be considered valid if the above conditions are met.

Copy of the Circulars are attached for your reference.

Disclaimer

That the contents of third-party articles/blogs published here on the website, and the interpretation of all information in the article/blogs such as data, maps, numbers, opinions etc. displayed in the article/blogs and views or the opinions expressed within the content are solely of the author's; and do not reflect the opinions and beliefs of NASSCOM or its affiliates in any manner. NASSCOM does not take any liability w.r.t. content in any manner and will not be liable in any manner whatsoever for any kind of liability arising out of any act, error or omission. The contents of third-party article/blogs published, are provided solely as convenience; and the presence of these articles/blogs should not, under any circumstances, be considered as an endorsement of the contents by NASSCOM in any manner; and if you chose to access these articles/blogs , you do so at your own risk.

Download Attachment

Tejasvi

Nasscom Public Policy Highlights | ...

Sudipto