- Zero rating benefits are available for export of services, but not every service provided to a foreign party qualifies as export.
- The definition of “export of services” lays down various conditions, including that payment for the services must be received in convertible foreign exchange.
- However, in certain cases, receipt of consideration in INR is considered as receipt of foreign exchange if there is a corresponding reduction in the outflow of foreign exchange.
- This principle has been upheld by the courts.
- Therefore, it cannot be simply concluded that services will not qualify as exports if the consideration is received/retained in Indian Rupees.
- The place of supply of such services must fall outside India to qualify as export.
Source CA Arushi Jain
