Import of Services under GST - Taxability and Exemption

Definition: Import of Services means supply of service, where:-

i) Supplier located outside India.
ii) Recipient located in India.
iii) Place of supply In India.

Transaction compiling all the above three conditions will constitute import of service.

Scope of Supply:

As per section 7(1)(b) import of service is specifically included in scope of supply. Following is the extract of section 7(1)(b):-

(b) Import of services for a consideration whether or not in the course or furtherance of business;

Hence every transaction of import of service whether by a business person or individual or any other person for business purpose or personal use is always be a supply.

Supply without consideration: As per Clause 4 of Schedule-I of CGST act, Import of service without consideration is also included in the scope of supply. Extract of the same is as follows:

4. Import of services by a taxable person from a related person or from any of his other establishments outside India, in the course or furtherance of business.

Hence import of service without any consideration from related person in the course of business is also a supply.

Inter-state or Intra-state: As per section 7(4) of IGST act, supply of service imported into the territory of India is inter-state supply. Extract of the provision is as follows:

(4) Supply of services imported into the territory of India shall be treated to be a supply of services in the course of inter-State trade or commerce.

Hence every transaction of import of service is inter-state supply

Levy: As per section 5(1) of IGST act, IGST shall be levied on all Inter-state supplies of goods or services on value at such rate as may be notified.

Since every import of Service is inter-state supply hence IGST shall be levied on every import of service.

Taxation of import of service for personal use:

As per section 7 of CGST act, 2017 import of service not for business purpose is also a supply and GST shall be charged such supply as per section 9 of CGST act, 2017. Hence every import of service for personal use is also leviable to GST.

There are exemptions related to import of service for personal use is as follows:

Hence all the import of service by a person for non-business purpose is exempt from GST except the follows:

i) Import of service of Online Information and database access or retrieval services.
ii) Transportation of goods by vessel from outside India to customs station of clearance in India.