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GST Liability under RCM for Freelancers (Export of Services)

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Magan

Service

40 Points Posted on 15 May 2021

In case of Freelancer Services thru up-work platform where Upwork deduct their charges (for providing clients/Commission) in foreign currency, Offshore bank do charge some charges while remitting the fund to Indian freelancer who has completed the job undertaken thru Upwork. Both (Upwork and Foreign Bank) are not registered under Indian GST. In this Scenario, my client is exporting services under LUT ie without payment of GST and also:

A. We sum up the Upwork Commission and Bank charges in foreign currency and convert to INR as per RBI guidelines.

B. We charge the GST @ 18 on Above Calculated INR considering the IMPORT OF SERVICES (Upwork and Foreign bank) and Pay under RCM.

Kindly confirm if our treatment is correct or not. Thanks in advance.

Replies (4)

Quick Summary

This discussion addresses the Goods and Services Tax (GST) liability for Indian freelancers exporting services through platforms like Upwork. It specifically queries the correct treatment of GST under Reverse Charge Mechanism (RCM) for charges deducted by Upwork (commission) and offshore banks (remittance fees) when these entities are not registered in India. The proposed treatment involves calculating GST on the sum of these charges, converted to INR, and paying it under RCM, while the main service export is under LUT.

CA Altamush Zafar

GST Consultant

10402 Points Posted on 15 May 2021

Yes that is correct

Pankaj Rawat

GST Practitioner

29904 Points Posted on 17 May 2021

Kindly also check for TDS liability under Section 195

Magan

Service

40 Points Posted on 17 May 2021

Thanks ! Actually both (Upwork and Foreign Bank) are not having any establishment in india. Mode of payment is thru banking channel and they are deducting their charges as their end, ie before remitting fund to india.