Foreign consultant fee

sir, 

good morning... 

we have appointed a foreign consultant from France for our business research on contract basis. 

we have to pay some amount as monthly charges and we have meet all his trip expenses in this regard. 

I believe that we have to pay gst at 18% under reverse charge. 

can you please suggest is there any option to escape from this liability???

because we are from agriculture industry our final products are exempt from GST, every input GST is our cost of product.

kindly suggest...
Replies (2)
Quick Summary
A business engaged a foreign consultant from France for research on a contract basis, incurring monthly charges and travel expenses. They are seeking to understand their GST obligations, specifically if the 18% Reverse Charge Mechanism (RCM) applies and if there are ways to avoid this liability, especially given their agriculture industry's GST-exempt final products. Advice suggests that if the services are intermediary in nature, the place of supply might be outside India, negating RCM. Alternatively, adhering to pure agency conditions for expense reimbursements could reduce RCM liability to only the consultancy fee.

If the foreign consultants services are in the nature of intermediary services, then the place of supply as per Section 13 would be outside India. Therefore, the transaction would not be liable as an "Import of Service" under Section 2(11) of CGST Act. Thus no RCM liability.

 

Although, in this case consultancy services may be liable as it may not be intermediary activity. Possible way to reduce RCM costs here is to comply with pure agency conditions (refer Rule 33 of CGST Rules) towards reimbursements expenses. Then RCM to be paid only towards consultancy fee.

Thanks sir.. thank you very much for your advice...

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