Query on LUT

Save Share

This query is : Resolved

Quick Summary

This discussion clarifies whether a Letter of Undertaking (LUT) can be used for services provided to an American client in Bangalore. For services to qualify as an export under GST, the place of supply must be outside India. Since the service is physically rendered in Bangalore, it's considered within India, making LUT inapplicable. Receiving payment in USD does not change this, as GST is still applicable when the place of supply is within India.

Jagadish T G

Jagadish T G (Querist)
Follow

02 December 2024 Hi!
I wanted to know if LUT can be considered for a American client for whom we are providing service in Bangalore?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
Follow

02 December 2024 To qualify as an export of service under GST, the following conditions must be met:

The supplier of the service must be located in India.
The recipient of the service must be located outside India.
The place of supply of the service must be outside India.
The payment for the service must be received in convertible foreign exchange or in Indian rupees wherever permitted by the Reserve Bank of India (RBI).
If the service is provided to the American client physically in Bangalore, it would be subject to Indian GST since it takes place within India.
Service supplied to an American client in Bangalore by a dealer is not classified as export of service because the place of supply is within India (Bangalore), and it doesn’t meet the necessary conditions to be treated as an export. As such LUT cannot be considered.

Jagadish T G

Jagadish T G (Querist)
Follow

02 December 2024 What if the payment is received in USD( remittance through bank) will GST still be applicable? As they will be already paying GST on the foreign remittance

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
Follow

02 December 2024 When POS is within taxable area, GST is applicable.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now