GST’s Applicability to the Reverse Charge Mechanism for Service Imports

GST is a levy that is based on the principle of supply.

Section 7(1) (b) of the CGST Act of 2017 defines supply as “import of services” for a consideration, whether or not in the course or furtherance of business.

If a supply of services is imported into India’s territory, it is treated as a provision of services in the course of inter-State trade or commerce, according to section 7 (4) of the IGST Act’2017.

According to section 5 (3) of the IGST Act’2017, the Government may, on the Council’s recommendations, specify categories of supply of goods or services or both, the tax on which shall be paid on a reverse charge basis by the recipient of such goods or services or both, and all the provisions of this Act shall apply to such recipient as if he is the person liable for payment of the tax.

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Government Recommendation on Section 5 (3) of the IGST Act 2017 – Notification No 10/ 2017


Note: A non-taxable online recipient is defined as the government, a local government, a government authority, an individual, or any other person who is not registered for GST and receives online information and database access or retrieval services for any purpose other than commerce, industry, or any other business or profession.

15CA/CB – Manual Filing Extended till July 15th


According to a recent notification a person/ company would be treated as a recipient of service and liable to pay tax on reverse charge basis for Import of Services from the foreign entity as a service provider are located in non-taxable territory

Note: The GST Act also states that if a person is liable to pay GST on a reverse charge basis, he must seek mandatory registration under the GST Act.