Export of service? check this before quoting

Export of service under the lense of GST authorities:

Export of service can get you in trouble. take care of following issues before you send a quote. If it falls in an intermediary or if the PoS is in India, you should add 18% to your bill. You are not eligible for any export benefit in that case. Section 13 of IGST Act is quite relevant here. You can use our PDF of IGST Act updated till date to access it.

If you are falling in the definition of intermediary:

Pos is in India as per GST provisions. No zero-rating benefits. This will result in additional cost of 18%. Exports are eligible for zero-rating. No tax liability is payable in this case. But to be an export POS shall be outside India. Case of the intermediary is an exception. In this case the PoS is assumed in India. It drags it out of the definition of export and thus zero-rating is not available. So in case the agreement is making it intermediary, you should add 18% extra to the cost as you will be liable to pay the tax and bear its burden.

services on Goods= Pos is location of goods 

This is another risky area. When you provide services on goods, they should be located outside India. When services are provided on goods located in India, it is not an export. Thus you lose the benefit of zero-rating. The tax burden is on the supplier. In this case also 18% increase in burden is there. When you quote for a foreign client take care of this. In some cases suppliers end up in a loss. In the case of foreign buyer, we cant add the tax to their invoice. The final burden of this 18% is on the supplier.

These two factors can change your profit curve. If ignored, it may convert a profit-making deal into a loss-making.  Get your agreement vetted by an expert on the subject to get it in the right shape. some minor changes in understanding may save you 18%. Otherwise, you may lose in competition.