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GST Applicability on Software Development

Sameer (Article) (111 Points)

20 October 2021  
The assessee is an indian basedThe assessee is an indian based private limited company rendering service for developing software to a singapore based company located in singapore. The indian assessee will be developing software here but server used will be of singapore company located in singapore. The payment would be received in SGD (Singapore Dollar) to the indian assessee.

Will this be considered as export of service and no GST would be levied or will GST be levied as developing of software is being done in India. private limited company rendering service for developing software to a singapore based company located in singapore. The indian assessee will be developing software here but server used will be of singapore company located in singapore. The payment would be received in SGD (Singapore Dollar) to the indian assessee.

Will this be considered as export of service and no GST would be levied or will GST be levied as developing of software is being done in India.

 3 Replies

sabyasachi mukherjee (6774 Points)
Replied 21 October 2021

Incorporation of the company is essential.
The Income received / earned/ accrued will be on behalf of Indian company incorporated in India.
However income earned or accrued outside India is an income earned in foreign exchange .Hence, deemed to accrue or arise outside India. Gst is not applicable on export earning.

debora M (BUSINESS DEVELOPMENT MANAGER)   (1384 Points)
Replied 21 October 2021

GST on IT sector will attract 18% on software services provided by software companies. For purely software services, the cost of such services will increase under GST.

sabyasachi mukherjee (6774 Points)
Replied 21 October 2021

Gst is applicable on software of services. But if any Indian company receives any order for development of software on behalf of any firm that earning is an export service for that Indian company .
Export service rendered by such company does not attract gst.
It's the same as export of goods where it is considered as exempted sale.Software development in India attract gst that everyone knows but export of service, hence exempted sale.

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