GST on IT services outside India

Hey there!

Great question about GST on IT services you provide to a US company while working from India. Let's break down your queries:

1) Do you need to register under GST?

• If your aggregate turnover in a financial year exceeds ₹20 lakh (₹10 lakh for some states), GST registration is mandatory.

• Since your contract is part-time and payment varies, you should monitor your turnover.

• If your turnover stays below ₹20 lakh, registration is optional (except in special cases like interstate supply).

• If you supply services to a customer outside India (export of services), even if turnover exceeds ₹20 lakh, you need to register to claim zero-rated benefits.

2) Do you need to pay GST? If yes, how much?

• Services you provide to a foreign client qualify as export of services under GST if these conditions are met:

  • Supplier (you) is located in India.

  • Recipient is located outside India.

  • Supply is not a mere transfer of goods from India to outside.

  • Payment is received in convertible foreign exchange or in Indian rupees wherever permitted.

  • Supplier and recipient are not related persons or related in specified manner.

• Export of services is treated as zero-rated supply, meaning:

  • GST rate on such services = 0%

  • You do not pay GST on your output supply (i.e., zero-rated).

3) Can you claim back any GST?

• Yes, if you pay GST on your input goods or services (like software, internet, office expenses), you can claim Input Tax Credit (ITC).

• You can claim refund of unutilized ITC on export of services under Section 54 of CGST Act.

• For claiming refund, GST registration is a must.

Summary:

If your turnover is below ₹20 lakh and you are doing export of services, it's advisable to get registered to comply with GST and claim ITC/refunds.