GST on outsourcing software development abroad

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This discussion clarifies the Goods and Services Tax (GST) rules for software development outsourcing. When outsourcing within India, the supplier charges 18% GST. For services outsourced outside India, it's considered an import of service, attracting 18% GST payable under the Reverse Charge Mechanism (RCM) by the importer, who can then claim Input Tax Credit (ITC).

mohamed ali & co

mohamed ali & co (Querist)
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29 June 2023 A software developer receives orders for development of software. Some of these works are outsourced within India and some works are outsourced outside India. What are the gst provisions for outsourcing within India and outsourcing outside India. Can the experts throw light on this issue please.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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29 June 2023 For outsourcing within India GST 18% will be charged by supplier and for outsourcing outside India it will fall under import of service 18% GST payable under RCM.

mohamed ali & co

mohamed ali & co (Querist)
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02 July 2023 For the import of service 18% payable. Can it be charged and collected from the outsourcing service provider abroad. Kindly clarify sir.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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02 July 2023 No, it has to be paid by importer and ITC can be claimed on it by the importer.
Not to be collected from outside India.

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