Clarification on Valuation of Imported Services by Related Persons with Full ITC Eligibility

Last updated: 27 June 2024

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This notification clarifies the valuation of imported services provided by related persons to businesses in India, specifically when the recipient is eligible for full Input Tax Credit (ITC). It addresses concerns raised by industry regarding tax demands on activities undertaken by foreign related entities. The clarification aims to align treatment with domestic related party transactions, ensuring fair application of GST rules.

F. No. CBIC- 20001/4/2024-GST Government of India Ministry of Finance Department of Revenue Central Board of Indirect Taxes and Customs GST Policy Wing **** North Block, New Delhi, Dated the 26th June, 2024 To, The Principal Chief Commissioners/Chief Commissioners/Principal Commissione

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FAQ :

The notification provides a clarification on the valuation of imported services supplied by a related person, particularly when the recipient in India is eligible for full Input Tax Credit (ITC).

It addresses concerns raised by businesses about tax demands being raised on reverse charge basis for services imported from related foreign entities, even when no consideration is paid.

Schedule I, S.No. 4 of the CGST Act, 2017, states that the import of services by a person from a related person or another establishment outside India, in the course of business, is considered a supply even if no consideration is involved.

The notification aims to provide the same treatment as domestic related party transactions, as clarified in Circular No. 199/11/2023-GST, for cases involving foreign entities providing services to related parties in India where full ITC is available.

The notification is addressed to Principal Chief Commissioners, Chief Commissioners, Principal Commissioners, Commissioners of Central Tax, and Principal Directors General, Directors General.